The New York City Rent Guidelines Board (RGB) voted on Thursday evening by 7:1 to freeze rents for one- and two-year leases in rent-stabilised buildings. This represents a significant political success for the democratic-socialist mayor, Zohran Mamdani, and affects an estimated one million homes in the five boroughs, which accounts for approximately 40 per cent of the city's rental housing stock.
Effective 1 October, the proposed range for rent increases on two-year leases for rent-stabilised apartments will be between 0 and 4 per cent, and between 0 and 2 per cent for one-year leases. The decision sparked a wave of outrage within the real estate industry of America's largest city.
Resignation and Criticism
Hours before the vote, Christina Smyth, a landlord representative and member of the Rent Guidelines Board since 2022, resigned from her position. In a critical letter of resignation, Smyth accused the board of ignoring the law and voting to satisfy the preferences of the new mayor, instead of adhering to facts, public testimony and data. Smyth wrote that this year's order had already been decided during the election campaign; everything since then had been mere theatre – from hearings to reports to public comments and data, none of which would ever have changed the outcome.
Mayor Mamdani, who took office in January, had promised during his election campaign to freeze rents for rent-stabilised units in New York City. The 34-year-old democratic-socialist, who won the mayoral election as a Democrat, appointed six of the nine board members in the last six months. The Rent Guidelines Board typically consists of five public members, two landlord representatives and two tenant representatives, with mayors usually given discretion in their appointments. Mamdani hailed the decision as a 'historic victory for New York City tenants'.
Historic Decision and Future Challenges
The current resolution marks a first, as the board has never before approved a rent freeze for one- and two-year leases since rent guidelines were first established in 1969. Rent freezes are a relatively new phenomenon in New York City. Previously, the Rent Guidelines Board first voted for a rent freeze in 2015 and twice more during Mayor Bill de Blasio's tenure, including once during the COVID-19 emergency. However, in those cases, the freeze exclusively applied to one-year leases.
Given a vacancy rate of merely 1.4 per cent, the Mamdani administration has made reducing rents a priority for the mayor in his first term. He reiterated his commitment to continue working to make the city more affordable by building and preserving affordable housing, lowering operating costs such as insurance, and informing tenants of their rights.
However, the decision is not universally welcomed. Faced with increased costs due to high interest rates, as well as rising insurance and energy costs, real estate industry stakeholders expressed sharp criticism. James Whelan, President of the Real Estate Board of New York, accused the Rent Guidelines Board of ignoring its own data and called the vote a 'terrible decision'. He said that older, rent-stabilised buildings were already suffering from rising operating costs. This decision would mean less investment in maintenance and repairs, which would accelerate the deterioration of the housing stock.
The Community Preservation Corporation (CPC), a non-profit organisation dedicated to affordable housing in New York City, also doubts that a rent freeze will improve living conditions in rent-stabilised buildings. Rafael E. Cestero, President and CEO of CPC, emphasised that neither a rent freeze nor a rent increase would solve the fundamental problems of rental affordability for tenants or the financial and physical difficulties of rent-stabilised buildings. These problems required consideration of the costs incurred by landlords to keep housing safe, stable and habitable.
In her letter of resignation, Smyth voiced even sharper criticism of the voting and fact-finding process. She stated that she could not, in good conscience, validate a process she considered completely unjust, adding that owners and tenants deserved better.
