Zohran Mamdani's rent freeze will warp NYC's housing market — and hurt us all

New York Post

3 days ago

The city's Rent Guidelines Board boldly embraced common sense Monday by voting to permit rent increases for the city's nearly one million rent-stabilized apartments — modest ones of 3% for one-year and 4.5% for two-year leases.
It was a courageous move in today's political climate.
Of course, struggling property owners should be able to collect enough rent to cover their rising expenses — insurance, property taxes, utility costs, not to mention sheer overall inflation.
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Yet Zohran Mamdani, city Democrats' mayoral nominee, is only doubling down on his promise not to raise, but to freeze regulated rents.
We've seen this rent-freeze movie before, though — and we should be grateful to the RGB for not green-lighting a sequel.
Former two-term Mayor Bill de Blasio, who has endorsed Mamdani's rent-freeze pledge, did just that three times during his eight years in office, and throughout his tenure his RGB appointees never approved an increase of more than 1.5%.
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As a result, the city reaped a whirlwind of deferred maintenance and health hazards.
In 2021, the federal Census Bureau's New York City Housing and Vacancy Survey told the de Blasio era's sorry housing story: It found — in its understated bureaucratic language — 'a higher prevalence of most individual maintenance deficiencies relative to earlier cycles.'
Translation: Freezing rents resulted in crumbling apartments.
The report compared the condition of rent-stabilized units with those that are unregulated — and its results should be eye-opening for those wanting to follow in de Blasio's footsteps.
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As de Blasio left office, 33% of rent-stabilized units (316,000 apartments) had rodents, twice as many as unregulated ones.
Roughly twice as many regulated apartments were found to have leaks, heating breakdowns, broken plaster or peeling paint, toilet malfunctions, elevator outages and mold.
As much as progressives may want to blame greedy slumlords for all these woes, the reality is that squeezing rental income — for property owners who must pay banks that certainly won't freeze mortgage payments — means repairs and improvements are more likely to be put off.
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Something had to give, and under de Blasio, it did.
The 2021 report also pointed to what has since become an increasing trend: 'ghost apartments' — units simply held off the market because the cost of repairing and operating them makes them money-losers.
In 2021 more than 28,000 units were off the market because they were 'awaiting renovation,' as the Census Bureau report optimistically put it. Another 27,000 were off the market for 'other' reasons.
Even as overall housing supply increased, under de Blasio the city saw 'a continued net loss of the lowest-cost units and a net increase of higher-cost units relative to 2017.'
In other words, high-end units not subject to rent stabilization were increasing. The mayor so intent on addressing inequality actually ushered in the opposite.
This is what a rent freeze leads to: Apartments that are pest-infested and shabby — or simply not on the market at all.
Under Mayor Eric Adams, whose signature 'City of Yes' initiative seeks to increase housing construction rather than freeze rent, the city has seen an increase of 275,000 occupied housing units (153,000 rentals and 123,000 owner-occupied).
That's not been nearly enough to loosen a super-tight housing market with a vacancy rate of just 1.4% percent — and it reflects developers' reluctance to build, for fear that even new units might become subject to rent regulation, as federally subsidized units are.
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Developers have been put off as well by the end of a state property-tax abatement law that meant to encourage more residential housing. The replacement law allows fewer of the higher-income units that help projects make economic sense.
And, as always, low turnover in rent-regulated units — where residents stay put because they've got such a good deal — increases the demand for non-regulated apartments, pushing up their rents.
There's little doubt a Mayor Mamdani would appoint a Rent Guidelines Board friendly to his rent freeze. After all, it's his signature issue.
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He'll have to ignore what that board has been told by Mark Willis of the Furman Center on Real Estate at NYU: that owners of rent-stabilized properties in The Bronx are, on average, losing a stunning $120 per month on every apartment, leaving 200,000 units, concentrated in that borough, under 'severe distress.'
If you think we can't return to the bad old days of 'The Bronx is burning,' think again.
And don't buy city Comptroller Brad Lander's snake-oil claim that regulated landlords are making a killing. Yes, they earned a 12% return this year — but only after four years of zero net operating income.
New Yorkers can see for themselves the damage wrought by a combination of artificially low rents and deferred maintenance.
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Just look at the city's 177,000 public housing units, where chronic elevator breakdowns trap residents in their homes and constant heating outages leave them shivering.
A rent freeze will bring us housing equality, all right — if you define that as equally poor conditions in both public and private rent-regulated apartments.
Howard Husock is an American Enterprise Institute senior fellow and author of 'The Poor Side of Town — And Why We Need It.'