Can my rent be reduced?

[lkassof]

I moved into my apartment as a sublettor 3+ years ago. This sublet was illegal which I discovered when the landlord was looking for her tenant. So, the landlord broke the lease with the old tenant, and signed a new, one year lease with me for $1050. I know that the previous tenant's rent was $850. Since then I signed a two year lease, and now my lease is up for renewal again.

I want to know if the inital increase was legal. Does 9 NYCRR § 2522.8 apply? I think that she should have only raised the rent 20% of $850 - (4% of $805 - 2% of $850), that is if I am reading the statute correctly and it applies to me. That would leave me at $1003.

Does anyone know if this is correct? And how I should go about implementing the reduction?

Thanks!

[consigliere]

There is an 18% increase for a one-year vacancy lease, unless there hasn't been a vacancy increase for at least eight years.
 
Did the landlord make any improvements to the apartment when you signed the vacancy lease?
 
For what to do about a possible overcharge, see Complaining about a rent overcharge in New York City, by attorney Ken Hawco.