Freezing rent is easy. Making NYC housing affordable isn't.

Japan Times

28-07-2025

Among the campaign promises that helped propel Zohran Mamdani to the Democratic nomination for mayor of New York City, his pledge to "freeze the rent' is at once the most radical sounding and the easiest to accomplish. In fact, it's been accomplished multiple times over the past decade.
The mayor chooses the nine members of the city's Rent Guidelines Board, which every year determines the allowable rent increase for the city's nearly 1 million rent-stabilized apartments. The members' terms are staggered, so a new mayor can't replace them all immediately, but with the two tenant representatives certain to favor a freeze, it would take only three of the five members appointed to represent the public to get to a majority (there are also two owner representatives, who would, of course, oppose a freeze). During Bill de Blasio's tenure as mayor, the board voted for no rent increases on one-year leases in 2015, 2016 and 2020 — as well as 0% for the first six months and 1.5% for the last six in 2021.
So, yes, Mamdani could deliver a rent freeze. Whether he should requires a longer answer.
This year's Rent Guidelines Board deliberations, which resulted in a vote earlier this month to allow a rent increase of 3% on one-year leases starting from October 2025 to September 2026, and 4.5% on two-year leases, provide a fascinating window (which one can gaze through on YouTube) into the crosscurrents buffeting tenants and landlords in New York. On average, New York's rent-stabilized landlords appear to be raking it in, with net operating income up 12.1% — 8% after adjusting for inflation — in 2023, the most recent year for which the board's staff has compiled income and expense data. But those averages mask a lot of variation and testimony about the struggles of nonprofit affordable housing providers since the pandemic seems to have been crucial in bringing about the 3% increase. The appointees of the next mayor, whoever he turns out to be, will confront the same dilemma.
New York City rents have been regulated since 1943, with the rent-stabilization system — and Rent Guidelines Board — dating to 1969. As of the most recent New York City Housing and Vacancy Survey, conducted by the U.S. Census Bureau in 2023, rent stabilization covered 779,000 occupied rental apartments in buildings constructed before 1974 (apartments covered by the pre-1969 system of rent control pass into rent stabilization when the tenant moves out or dies) and 181,700 in newer buildings that accepted rent regulation in exchange for tax breaks or other subsidies. Together that amounts to 48% of the city's occupied rental apartments and 28% of occupied housing units overall. This makes rent stabilization by far the city's (and the nation's) biggest affordable-housing program, with almost six times as many rent-stabilized units as there are apartments in the New York City Housing Authority's public housing projects.
A 2023 study by economists Ruoyo Chen, Hanchen Jiang and Luis E. Quintero estimated that the monthly rent-stabilization discount in New York City averaged $450 a unit in 2017. Multiply by 960,700 apartments, and that's a $5.2 billion annual subsidy from New York City's landlords to its rent-stabilized tenants. That has surely grown since 2017 as market rents have outpaced stabilized rents.
This is, economically speaking, an extremely inefficient way to keep housing affordable. By reducing the return on housing investment, rent regulation reduces investment in housing. Politically, though, it has proved much more achievable than the outright subsidies that economists recommend. The city's annual contribution to its second-biggest affordable-housing program, NYCHA, is not much more than $200 million (the federal government has been chipping in close to $3 billion a year, but that is likely to fall).
The job of the Rent Guidelines Board, then, is to balance affordability for rent-stabilized tenants with enough income for landlords to keep their buildings in good condition. Avoiding the fate of NYCHA, where decades of underinvestment have left buildings in grave disrepair, is an oft-mentioned priority.
For owners of many rent-stabilized buildings in affluent parts of the city, bringing in enough rent revenue to cover costs became a lot easier after the state legislature voted in 1993 to remove apartments from rent stabilization when the rent passed a threshold ($2,000 at the time, higher in subsequent years) and the apartment became vacant or the tenants' household income exceeded $250,000 (later dropped to $175,000). Over the next 27 years, this deregulation removed 177,048 apartments from the rent-stabilized rolls, 69% of them in Manhattan.
High-rent deregulation came to an end with the Housing Stability and Tenant Protection Act of 2019, approved by a state legislature that Mamdani had not yet joined (he was elected to the state Assembly in 2020) and signed into law by none other than the governor at the time, Andrew Cuomo, who after losing to Mamdani in the Democratic mayoral primary announced that he would run as an independent in the general election. The bill's passage (and especially Cuomo's decision to sign it) came as a shock to real estate investors who had been piling into rent-stabilized buildings in hopes of cashing in as more apartments were deregulated — Bloomberg's Patrick Clark and Prashant Gopal did a great job last year of depicting the market turmoil that has resulted. The deregulation of the previous three decades, meanwhile, left the city's rent-stabilized housing stock bifurcated between a bunch of buildings concentrated in Manhattan south of Harlem ("Core Manhattan' in Rent Guidelines Board parlance) where most of the apartments are market rate and the 50% of rent-stabilized buildings citywide where 100% of the apartments are regulated.
Which brings us back to the dilemma faced by the Rent Guidelines Board. Over the years, the board has tried to keep rent increases in line with increases in operating costs, which generally rise with inflation. Rent was frozen in 2015 and 2016 because costs weren't rising — the nonshelter consumer price index for the New York area actually fell both years. But the increases approved by the Rent Guidelines Board in 2021 and 2022 fell far short of inflation and the increases since then have only more or less kept up.
Rents on market-rate apartments in the city have risen faster than inflation since just before the pandemic, in part because the 2019 rent law cut off what had been a steady stream of newly unregulated apartments coming on the market each year. As a result, rent-stabilized buildings in Core Manhattan — most of which, remember, are majority market rate — experienced a whopping 23.1% gain in net operating income in 2023. In the Bronx, where 75% of rent-stabilized buildings have only rent-stabilized units, net operating income rose just 0.8%, a decline in inflation-adjusted terms. On average, even the 100% rent-stabilized buildings in the Bronx still turned a monthly operating profit of $325 a unit, but 476 buildings there, 12.7% of the total, reported negative net operating income in 2023.
These financial struggles are accompanied by increasing signs of physical decay, with the average number of maintenance deficiencies in pre-1974 rent-stabilized buildings up 45% since 2017, according to the Housing and Vacancy Survey. This is not just a tale of greedy landlords: Representatives of two large affordable-housing nonprofits, the Community Preservation Corporation and Enterprise Community Partners, told the Rent Guidelines Board that the New York City buildings they're involved with are increasingly struggling to keep up. Nearly 60% of the 160 buildings in Enterprise Community Partners' New York City Low-Income Housing Tax Credit portfolio were "cash-flow negative' in 2023, senior director Tania Garrido said, up from 20% in 2019.
One big reason these buildings are struggling is that, while insurance costs are up for real estate owners nationwide, for less-than-clear reasons they rose a shocking 103% from 2019 to 2023 for owners of affordable housing in New York City. Another is that the share of tenants paying their rent on time fell in 2020 and 2021 and hasn't fully recovered. The COVID-19 pandemic hit working-class New Yorkers especially hard, with employment in construction, retail, leisure and hospitality in the city is still below pre-pandemic levels. Raising rents doesn't seem like the optimal solution to a problem caused in part by people not being able to afford the rent. But it's the only arrow the Rent Guidelines Board has in its quiver.
The city and state have more arrows. In his campaign literature, Mamdani stresses reforming New York's property tax system, which taxes apartment buildings much more heavily than single-family homes but also gives inexplicably large tax breaks to some high-end condominiums and coops. He wants to "put our public dollars to work' building 200,000 new rent-stabilized apartments over the next decade, offering a set of wonky suggestions for how to fund this and has some interesting ideas for pooling rental assistance funds currently distributed as vouchers to tenants (or not distributed; utilization rates are quite low) to support struggling affordable buildings directly.
None of these is as catchy or easy to deliver as freezing the rent. It's understandable why Mamdani chose this as a campaign pledge, and probably inevitable that the Rent Guidelines Board will deliver at least one 0% annual rent increase if he is elected. Whether he succeeds in making housing more affordable in New York City, though, will depend on what else he does.
Justin Fox is a Bloomberg Opinion columnist covering business, economics and other topics involving charts.