In Upper Manhattan, two units sit empty in two well-maintained, century-old mid-rise elevator buildings. One, a four- or five-bedroom unit with a large kitchen and midday light spilling through the back room, would be the perfect space for a family with young children or for a group of roommates; it would rent for about $3,700 on the open market. The other, a ground-floor one-bedroom, would make a cozy home for a single adult or a couple, and would command about $2,500 on the open market.
But the units aren’t for rent and probably won’t be anytime soon. After decades with the same tenant, the large apartment needs a full overhaul at a cost likely exceeding $150,000. The smaller unit was packed to the ceiling with the belongings of a deceased tenant; after I visited, the landlord spent about $3,000 to clear it out. It, too, needs a gut renovation.
It makes no economic sense for the property owners to invest the necessary capital to make these apartments livable because of changes the New York State Legislature made to rent regulation laws in 2019. The state capped the amount that owners could recoup for renovations, now allowing them to pass through, at most, $50,000 in such costs over time. It also ended the deregulation of higher-priced vacant units and tightened restrictions on rent increases for lower-priced vacant units.
The rent on these two empty apartments is about $1,000 and $900 a month, respectively, meaning the new restrictions make new investments unjustifiable. Add to this stress Mayor Zohran Mamdani’s proposal for a four-year rent freeze, and both apartments are perversely more valuable empty. Investing in a Treasury bond would yield a better return than investing in the apartment.
So these potential homes have joined the more than 26,000 rent-regulated units that sat indefinitely empty as of 2023. Nearly one in 10 buildings with units that fall under rent regulation lost money that year, nearly double the level of a decade ago.
The city is facing a slow-motion degradation of a critical urban asset unless the mayor abandons his rent freeze and persuades the state to let landlords more easily recoup investment costs.
Rent-regulated apartments, numbering just below one million, make up almost half of the city’s rental stock. New York first debuted a form of rent control in 1920, to help tenants cope with postwar inflation. The current regime dates from the late 1960s and early 1970s. It covers mostly buildings built before 1974, and mostly units with rents below $3,000. Under state law, a board of mayoral appointees determines the annual rent increases, and it is supposed to take property owners’ costs into account. In recent years, annual rent increases have ranged from zero to 4.5 percent. From the early 1990s through 2019, the law allowed for the deregulation of empty units once they crossed a rent threshold, about $2,700 per month, and liberally allowed owners to pass through repair and renovation costs.
For decades until 2023, the average New York City landlord’s income from rent-regulated apartments rose faster than costs.
But these averages obscure growing differences among buildings and neighborhoods. The average city building with rent-stabilized apartments in it brings in $1,599 in rent per apartment per month and costs $1,160 to operate and maintain, not including mortgage payments. In much of Manhattan, and in waterfront Brooklyn and Queens — areas that have seen an influx of highly paid newcomers in the past three decades — landlords can offset losses on rent-regulated apartments with higher rents from market-rate units in the same buildings or in their property portfolios.
Elsewhere — particularly in Upper Manhattan and much of the Bronx, where the level of distressed buildings is far higher than it is in core Manhattan — buildings often consist almost entirely of lower priced regulated units. This divergence shows up in the data: In core Manhattan in 2023, average rents in buildings with regulated units were $2,787; in the Bronx, they were just $1,145, and in Brooklyn and Queens they fell in between.
As property taxes, water and sewer charges, heating costs, labor and insurance continue to rise, the owners of these buildings are more likely to defer maintenance, let them fall into disrepair or sell them at discounted prices.
Even the Mamdani administration acknowledges how this strain has affected the markets. When the mayor’s office tried unsuccessfully to delay the bankruptcy sale of roughly 5,000 rent-regulated units to a firm it asserted has a bad record as a landlord, it warned in court that the prospective buyer might not be able to “maintain a profitable business based on the income stream from the rent-stabilized or rent-controlled apartments.” In that case, the city said, “the buildings might fall into even greater disrepair.”
Mr. Mamdani’s proposed rent freeze only magnifies the problems. These economic realities help explain why rent-regulated building values have declined since 2019.
“The value of these buildings has fallen every day” since the law’s passage, says the broker Seth Glasser. The average price of a building with rent-regulated units fell nearly 29 percent per apartment between 2023 and 2024 alone. Mr. Glasser cites an Upper Manhattan building that sold for $12.5 million in 2016 and just $6 million in 2022; a sister property is listed for $4 million now.
If private owners, unable to charge sufficient rent or recover necessary capital costs, give up on rent-regulated housing and default on their taxes, the city would become stuck with some of the more than 1,500 currently distressed buildings, if not more, as was the case in the 1970s. The city would likely offer management contracts to nonprofit groups to run the buildings. But such groups, and thus the city, would face the same math that current property owners face: At those rents, the apartments cannot pay for themselves without significant subsidies. The nonprofits would not pay property taxes, and the city also would need to make up that lost revenue elsewhere, including through higher taxes on market-rate rental housing.
New York is not alone in confronting these trade-offs. Even the Netherlands — a country much more skilled in providing effective social services — backed away from a proposed two-year rent freeze on privately owned affordable housing last year as the fiscal and maintenance risks became clear.
An extended rent freeze, as Mr. Mamdani has promised, would also create a political trap. Once rents are frozen, unfreezing them, even in a time of sharp inflation, would be perilous for any candidate. Would Mr. Mamdani campaign in 2029 on lifting his freeze? Would a challenger propose such an idea?
In the first half of the 20th century, New York City kept its subway fare frozen because no mayor would dare to propose an increase. The system predictably fell into disrepair, from which the recovery took decades. Are we about to create the same stagnation for much of the housing market?
Rather than making defaults even more likely by freezing rents, the city can help tenants by cutting owners’ costs — from alleviating requirements for regular facade inspections to reducing growth in property taxes for apartment buildings, which could limit rent increases. A tax break program for developers already requires them to build some lower-priced units (although, for larger buildings, it also imposes higher wages for construction workers).
New York could help renters in small but significant ways. A searchable state database of rent-regulated apartments, and of newly built units that benefit from tax subsidies, would let renters negotiate knowledgeably, much as home buyers do when they can see comparable sales. Public disclosure of rent-regulated units would also make it easier to ferret out fraud and abuse, including tenants illegally subletting their units for higher prices and tenants with second homes elsewhere. The city could eliminate junk fees, like charges to pay rent with an electronic check.
Finally, Mr. Mamdani, who has proved himself flexible on changing his mind on issues such as policing, can prove flexible here as well. He should encourage Gov. Kathy Hochul to revisit New York State’s 2019 restrictions on rehabilitating vacant units. Ideally, owners could deregulate vacant apartments, increasing the supply of older, naturally less costly market-rate housing, or allow them to reset the rent to market rate at vacancy and then by annual, regulated amounts tied to inflation thereafter. Short of that, the state should permit owners to recover a greater share of renovation costs over time.
But there is no one neat trick to making New York’s rental housing cheaper — and the stark fact is that the city’s rent-regulated units are already, relatively speaking, affordable, with a median rent of about $1,500, compared with $2,000 for a market-rate unit. Another stark fact is that for many New York families, rent exceeding $3,500 and more is affordable; it is better for them to have the option to pay more for a suitable apartment and stay in the city than to leave the apartment empty and send them to the suburbs, where they are going to pay a similar or higher amount on a mortgage payment, anyway.
Tenants in regulated units already enjoy the protection of regular low-level annual price increases. Imperiling what’s already working for them — if imperfectly — to score a few populist points makes no sense, and it doesn’t help market-rate tenants who don’t enjoy such rent protections and who are already subsidizing rent-regulated units in mixed buildings and property portfolios.
If Mr. Mamdani is unwilling to pursue useful reforms, he should heed a basic governance principle: Do not make things worse.
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