Media

Rent-regulated apartments, numbering just below one million, make up almost half of the city’s rental stock. New York 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 monthly 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 monthly 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 and heating, labor and insurance costs 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 company it asserted had 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 would only magnify 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 from 2023 to 2024 alone. He 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 probably 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 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 he campaign in 2029 on lifting his freeze? Would a challenger propose such an idea?