The New York City Rent Guidelines Board (RGB) recently decided to freeze rents for one- and two-year rent-stabilised lease renewals. This decision fulfils one of Mayor Zohran Mamdani's key campaign promises. For the approximately 2 million New Yorkers living in rent-stabilised apartments, this measure was understandably welcomed as financial relief in times of rising living costs. However, the question of the true costs of this decision arises.
Aside from political rhetoric and constant media buzz, housing policy should always be evaluated objectively. Regardless of political affiliation, effective policy must be measured by its real-world impact: whether the intended benefits outweigh the unintended consequences, whether the root cause of the problem is addressed, and whether it is based on sound economic principles. Applying these questions to rent freezes reveals a more complex picture.
The New York multi-family property landscape dramatically changed in 2019 with the passage of the Housing Stability and Tenant Protection Act (HSTPA). To landlords' dismay, the HSTPA expanded tenant protections, capped rent increases related to building improvements, and effectively ended the path to deregulation of apartments where market-rate rents could be charged. Since the HSTPA came into force, owners of multi-family properties have faced operational challenges, and some of the prominent banks that financed these properties have disappeared.
Even today, numerous banks are burdened with high-risk loans for multi-family properties, as declining property values have made many assets worth less than the debt they secure. Freezing rent increases undoubtedly offers much-needed relief to tenants facing the ever-increasing costs of living in New York City. However, this relief comes with significant costs, affecting both property owners and the tenants who experience this relief.
According to reports from the RGB Price Index of Operating Costs, the cumulative increase in operating costs for rent-stabilised buildings from 2020 to 2025 totalled 30 percent. In comparison, the permissible rent increase over the same period was only about 9 percent. This 21 percent difference is partly explained by the rent freezes implemented between 2020 and 2022. If landlords cannot raise rents to offset annual increases in operating and maintenance costs, they cannot reasonably be expected to bear the costs of maintaining their buildings and their units. This can lead to poorly maintained buildings and unsuitable living conditions for many tenants.
Industry insiders estimate that 50,000 to 100,000 of these apartments are currently vacant, as some landlords find it more economical to hold the units rather than rent them out at an operating loss. These are often referred to as “ghost apartments”. Furthermore, the inability to raise rents and maintain buildings leads to property devaluation. Devalued multi-family properties affect property owners, the financial institutions that lend to property owners, and the city, whose property taxes are based on property valuations. The cold reality is that devaluation harms everyone. New York City derives more than 50 percent of its revenue from property-related taxes, and preserving value should be a priority.
Housing shortages were already an issue in New York City before I started practicing law. In July 2026, the market rent for a one-bedroom apartment in Manhattan reached a record high of US$5,400 per month. Many believe that rent-stabilised tenants are entitled to remain in their apartments and should not have to bear the landlords' expenses through rent increases. This mindset is shaped by the public perception that landlords inherently exploit tenants and charge exorbitant prices to make massive profits. In reality, building owners in New York City are burdened with annual increases in property taxes, insurance, and maintenance costs. Many buildings comprise both rent-stabilised and market-rate units. During a rent freeze, landlords will increase rents for market-rate units to offset the loss.
The unresolved core problem that a rent freeze does not address is the lack of affordable housing. Government regulations in the area of affordable housing, such as rent freezes, have historically been ineffective. For decades, New York has tried to address the supply of affordable housing through various laws and ordinances, without acknowledging the economic reality that landlords and developers need to make profits. While many of these efforts were well-intentioned, the problems persist. Meanwhile, across the country, we are seeing new multi-family developments and much-needed affordable housing in areas such as Tennessee, Texas, Florida, North Carolina, and South Carolina, where there is no rent regulation and substantially lower income taxes. These states incentivise developers and lenders to build housing, leading to a win-win situation.
New York must take note of this and find a way to retain property investment capital here. The government and the private sector must work together to find a reasonable balance so that landlords can operate and maintain existing multi-family properties. The strategy must shift from punishing landlords to incentivising landlords and developers to create affordable housing. The time has come for a balanced public-private partnership that benefits everyone.
