Zohran Mamdani\u2019s promise to \u201cfreeze the rent\u201d was central to his affordability-focused mayoral campaign. But delivering on that promise isn\u2019t something that he can do himself.<\/p>\n
Rather, Mamdani will need to persuade or appoint members of the city\u2019s Rent Guidelines Board. The RGB is an independent body that decides on allowable increases for stabilized units. By law<\/a>, it must do so only after weighing<\/a> factors like inflation, interest, taxes, energy costs, and vacancy rates.<\/p>\n Finally, a reason to check your email.<\/p>\n Sign up for our free newsletter<\/strong> today.<\/p>\n Pushing through his rent-freeze plan will be Mamdani\u2019s first big test as mayor. In my conversations with current board members\u2014granted anonymity to speak candidly\u2014it seems likely to be challenging. While none of the three members seemed dead-set against Mamdani\u2019s plans, all saw their legal mandate, and the steep costs that landlords currently face, as a major impediment to getting it done. Striking the right balance between affordability and sustainably maintaining the city\u2019s housing stock seems difficult unless the city meaningfully addresses the factors that affect costs.<\/p>\n The RGB exists to set the maximum allowable rent increase for stabilized apartments, which make up nearly half<\/a> of the city\u2019s apartment stock. While the mayor appoints all nine members to the board for staggered terms, he cannot remove them unilaterally. Promisingly for Mamdani, eight of the nine members\u2019 terms will have expired<\/a> when he takes office, enabling him to appoint replacements\u2014unless outgoing mayor Eric Adams fills<\/a> the seats before then.<\/p>\n In recent years, the board has kept rent increases surprisingly low. One member explained that, \u201cwe actually set a record for consecutive one-year increases below the New York City Regional Price Index<\/a>,\u201d saying that New York is \u201con track for ten consecutive years of below CPI increases.\u201d In other words, while wages<\/a> kept pace with inflation<\/a>, rents did not; they actually declined in real terms.<\/p>\n One factor the RGB considers are net operating expenses\u2014or revenues minus expenses. \u201cOver ten percent of buildings are underwater,\u201d that board member continued. This explains the existence of \u201cghost apartments\u201d\u2014 of which there are an estimated 26,000<\/a> vacant units\u2014arising because operating expenses exceed legal rents that owners can legally collect.<\/p>\n Landlord\u2019s needs, combined with legal changes, mean that a nominal rent freeze\u2014a zero percent annual allowable increase\u2014is less feasible. When the RGB voted for a zero percent one-year increase under Mayor Bill de Blasio, the state had \u201cgenerous allowances for improving apartments and building structures,\u201d a second RGB member told me. But in 2019, Albany<\/a> passed reforms that reduced owners\u2019 ability to factor costs of renovations and maintenance into rents. The state also repealed exceptions that had allowed landlords to raise rents following a vacancy or for high-rent or -income tenants, which had encouraged owners to renovate and improve units.<\/p>\n There are other constraints. Another member said that the board must \u201cfollow economic data\u201d and \u201ccannot prejudge\u201d the merits of a rent freeze. \u201cA long rent freeze would be very financially damaging to the city\u2019s housing stock,\u201d the member said. \u201cThere are times when rent freezes are justified . . . but inflation was much lower under de Blasio.\u201d<\/p>\n Landlords\u2019 debt is yet another cost that must be weighed. One board member highlighted how the board found \u201ca fourth of buildings are cash flow negative when debt is factored in,\u201d indicating \u201ca broad range of distress for these buildings.\u201d<\/p>\n The mayor-elect could make a rent freeze more viable by decreasing owners\u2019 property-tax burden. Since taxes are one of the cost factors considered by the RGB, reducing these might allow landlords to continue meeting expenses despite a nominal freeze. But one member was skeptical this would help since even nonprofit operators\u2014 who aren\u2019t subject to property taxes\u2014are \u201cfacing substantial difficulties.\u201d Asked about the possibility of compensating owners through grants or tax abatements to mitigate the effects of a rent freeze, the member said these would reflect a \u201cdollar-for-dollar transfer which doesn\u2019t solve the underlying problem\u201d of costs.<\/p>\n One solution is to pair a freeze with deregulation that lowers landlord\u2019s costs. One member noted the importance of addressing escalating<\/a> insurance payments, which \u201cnow make up a larger cost category than even fuel.\u201d Mamdani could push Albany to pass reforms that would reduce owners\u2019 liability. Several interviewed members also said New York could reform state<\/a> and local<\/a> scaffolding laws that, as the Manhattan Institute has highlighted<\/a>, account for a \u201c7% increase in affordable housing and other development costs.\u201d<\/p>\n Another approach, one board member said, would be for the city to permit \u201cperformance-related increases.\u201d This would let well-maintained buildings raise rents in line with costs, while those with five or more violations per unit would see their rents frozen. This would \u201cpunish landlords\u201d that \u201cbreak the law,\u201d while \u201cincentivizing the 95 percent of owners that maintain their buildings\u201d to recoup costs.<\/p>\n Property owners are watching developments closely. Kenny Burgos, who heads the New York Apartment Association, said that it was imperative that the \u201cRent Guidelines Board looks at the data\u201d before reaching a decision. Asked if the mayor-elect could face legal action if the board declared a rent freeze despite high costs, he said only that \u201call options remain on the table.\u201d<\/p>\n Mamdani faces stiff obstacles to fulfilling his biggest campaign promise. But the bigger challenge will emerge if he succeeds: further deterioration of the housing stock, more \u201cghost apartments,\u201d mounting pressure on non-stabilized parts of the rental market\u2014and no new development to meet demand.<\/p>\n