Deregulation of a high-rent apartment may occur as follows:
A. High-Rent Vacancy Deregulation
If an apartment is vacated and the legal regulated rent (Rent Stabilization) or maximum rent (Rent Control) is lawfully at or above the Deregulation Threshold when rented to the next tenant, such apartment qualifies for permanent deregulation, and therefore for removal from all rent regulation. The Deregulation Threshold is adjusted on an annual basis. Please refer to this link Deregulation Rent and Income Threshold
B. High-Rent High-Income Deregulation
Upon the issuance of an order by the DHCR, apartments which have a legal regulated or maximum rent at or above the Deregulation Threshold and which are occupied by persons whose total annual federal adjusted gross incomes, as reported on their New York State Income Tax returns, have been in excess of $200,000 for each of the two preceding calendar years, may be permanently deregulated under the procedures set forth below.
An apartment subject to Rent Control is vacated. The owner calculates a legal rent above the Deregulation Rent Threshold for the incoming tenant and is considering charging the tenant a preferential rent that is less and is also below the Deregulation Rent Threshold.
(a) Can the owner charge a preferential rent?
(b) Is the apartment deregulated?
(a) No. There cannot be a "preferential rent" during the term of the initial rent stabilized lease. If a rent of less than the Deregulation Rent Threshold (DRT) is actually paid by the tenant, this rent amount becomes the legal rent, even if a rent at or above the DRT is cited in the lease.
(b) The apartment is deregulated only if the rent that is at or above the DRT was lawfully calculated and is paid by the tenant. The tenant can challenge it with DHCR.
Notice of apartment deregulation pursuant to high rent vacancy.
Guide to Rent Increases for Rent Stabilized Apartments in New York City