From the “totally predictable consequences” department comes news that Mayor Zohran Mamdani’s rent freeze is drying up financing for distressed rent-regulated properties, including nonprofit providers.
The result? Less maintenance, more foreclosures and higher market-rate rents: Socialism delivers its usual disasters, in other words.
Lenders, from local community-development nonprofits all the way up to federally chartered mortgage giants Fannie Mae and Freddie Mac, are toughening lending standards for rent-regulated buildings because the rent freeze just choked their expected income.
That is: Lenders expect to get their money back, with interest — these borrowers will now have less revenue coming to make payments.
News site The City Reporter just discovered that the rent freeze has made it impossible for landlords to get financing, unless the building has a significant number of market-rate units on top of its rent-regulated ones (in which case, market-rate renters pay extra to subsidize the cost of their rent-regulated neighbors).
With no market-rate tenants to eat the rising costs of labor, energy, taxes, insurance and materials, plus higher interest rates, owners of 100% rent-regulated buildings are out of luck.
Socialist housing advocates like Democratic Socialists of America co-chair Gustavo Gordillo laugh, smarmily encouraging struggling landlords to “pull themselves up by their bootstraps” and smirking that the Constitution doesn’t guarantee them “double digit” returns on their investments.
Of course, the socialists want private landlords to give up so their buildings can be turned over to politically connected nonprofits who’ll take over city housing.
Mamdani housing guru Cea Weaver’s New York State Tenant Bloc said it explicitly in July: “If landlords can’t maintain their buildings, tenants will.
“The Mayor’s Housing Plan directs $2.2 billion to taking housing off their hands. Tenants are organizing to defend our communities and reclaim our homes.”
One big problem: The nonprofits still need financing to maintain these buildings — which don’t generate enough rent to pay for their constantly rising costs, and therefore also can’t get loans.
The socialists can’t even blame greedy capitalists, since not-for-profit lenders are tightening standards, too.
This mess was totally predictable, and was widely predicted, in these pages and elsewhere.
Mamdani and his socialist-dreamer team went ahead anyway; maybe they really believe they can rewrite the laws of economics and human psychology at will.
Or maybe they figure that, whenever socialism fails, they can just insist that the answer is more socialism.
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