The real estate industry has criticized Mayor Zohran Mamdani’s proposal to freeze rents on rent-stabilized apartments as a reckless idea that could bankrupt landlords and stunt New York City’s economy.
A new independent analysis, though, is offering a less ominous conclusion.
The analysis, released on Wednesday by the debt-ratings firm Moody’s, found that even a five-year freeze would place only a small share of landlords — 6 percent — at risk of defaulting on their mortgages.
This is in part because a vast majority of landlords could still raise rents on market-rate units in the same buildings or elsewhere in their portfolios, lightening the financial burden.
“We’re talking, incrementally, something very small,” said Darrell Wheeler, the head of commercial mortgage-backed securities research at Moody’s and the lead author of the analysis.
Still, he cautioned that there would be “some economic pain for some of these landlords” if a rent freeze took effect, particularly if those landlords exclusively owned stabilized units.
The New York Apartment Association, a landlord advocacy group, argued that the Moody’s analysis was limited because it covered only a small subset of newer apartment buildings that get city tax breaks.
The group argued that the report overlooked the challenges facing older buildings in the boroughs outside Manhattan that often do not get any city help.
“If a freeze moves the needle on the strongest players in our market, just imagine what it does to the most vulnerable buildings,” said Kenny Burgos, the chief executive of the association. “This is a warning, not reassurance.”
The report adds to the intensifying debate over the proposed rent freeze. The Rent Guidelines Board, the independent panel that decides whether to allow rents to rise in stabilized apartments, left the door open to a freeze during a preliminary vote in May. It will cast a final vote on the matter at the end of this month.
If the panel votes in favor of a freeze, it would give New York one of the strictest rent caps in the nation and enable Mr. Mamdani to deliver on a key campaign promise during his first few months in office.
Landlords have said freezing rents would make it even harder to deal with rising property taxes, insurance premiums and other costs, leading to worse conditions for tenants.
Many landlords have said they are keeping units vacant because it would cost too much to renovate and repair them.
In response, Mr. Mamdani has said the city could help landlords by subsidizing insurance costs or exempting some distressed buildings from a freeze.
The analysis considered about 481 loans made to owners of apartment buildings. Those loans cover roughly 7,000 apartments in buildings across the city, though Mr. Wheeler said he believed it was a representative sample of the city’s overall housing stock.
The loans that Moody’s analyzed are part of financial products known as commercial mortgage-backed securities. These products are essentially bundles of loans packaged together — for not only apartment buildings, but also offices, restaurants, malls and more — and sold to investors.
If owners can pay their mortgages, the products, or bonds, remain good investments; everyday people often invest their savings in funds that include them. But a major change like a prolonged rent freeze could sour the investments.
Moody’s modeled how the bonds would fare if rents were frozen for five years. Mr. Wheeler said Moody’s rates only the safest types of bonds, acknowledging that the analysis might leave out riskier situations.
The analysis determined that landlords were at risk of default if they could not cover their debt payments with income from the apartment building, or they did not have enough money to refinance their loan.
Mr. Wheeler said he did the analysis after investors became concerned by Mr. Mamdani’s rent freeze proposal and asked how it might affect bond ratings.
“I don’t think we’re going to see downgrades due to this action,” Mr. Wheeler said.
Mihir Zaveri covers housing in the New York City region for The Times.
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