The True Costs of New York’s Rent Freeze Will Make Themselves Known

The New York City Rent Guidelines Board (RGB) recently voted to freeze rents on both one- and two-year rent-stabilized lease renewals, fulfilling one of Mayor Zohran Mamdani’s signature campaign promises. For the approximately 2 million New Yorkers living in rent-stabilized apartments, the decision was understandably welcomed as a financial reprieve during a time when the cost of living continues to rise. 

The question, however, is: at what cost?

When political rhetoric and the constant noise of modern media are set aside, housing policy should be evaluated through a clear and objective lens. Regardless of political affiliation, effective policy must be measured by its real-world impact: whether the intended benefits outweigh unintended consequences, whether it addresses the root cause of the problem, and whether it is supported by sound economic principles. 

Applying those questions to rent freezes reveals a more complicated picture.

The New York multifamily landscape changed dramatically in 2019 with the passing of the Housing Stability and Tenant Protection Act of 2019 (HSTPA). Much to landlords’ dismay, the HSTPA expanded tenant protections, limited rent increases associated with building improvements and effectively ended the pathway to apartment deregulation where market-rate rents could be charged.  

Since the passing of HSTPA, multifamily landlords have faced operational challenges and some of the prominent banks that financed these properties have disappeared. Even today, numerous banks remain burdened by high-risk multifamily loans, as declining property values have left many properties worth less than the debt they secure.

There is no doubt that freezing rent increases provides much-needed relief to tenants that face the ever-increasing costs to live in New York City. However, this relief comes at a significant cost, impacting both the property owners and tenants receiving relief. 

According to the RGB Price Index of Operating Costs reports, the cumulative increase in operating costs of rent-stabilized buildings from 2020 to 2025 was 30 percent. For sake of comparison, the permitted rent increase during that same period was approximately 9 percent.  This 21 percent delta is partially explained by the rent freezes implemented between 2020 and 2022.

If landlords cannot increase rents to offset annual increases in operational and maintenance costs, then they cannot be reasonably expected to bear the cost of maintaining their buildings and its units. This can lead to poorly maintained buildings and unsuitable living conditions for many tenants. Industry insiders believe that 50,000 to 100,000 of these apartments are currently empty as some landlords find it cheaper to hold the units than to rent them at an operational loss. These are often referred to as “ghost apartments.”

Furthermore, the inability to increase rents and maintain buildings leads to property devaluation. Devalued multifamily properties impact the property owners, the financial institutions that lend to property owners, and the city, which bases real estate taxes on property valuation. The cold reality is that devaluation hurts everyone. New York City derives more than 50 percent of its revenue from real estate related taxes, and preserving valuation should be a priority.

Housing affordability in New York City has been a problem since before I started practicing law.  

As of July 2026, market-rate rent for a one-bedroom apartment in Manhattan is $5,400 per month, a record high. Many believe that rent-stabilized tenants are entitled to stay in their apartments and should not have to pay for landlord’s expenses via rent increases. This mindset is shaped by the public perception that landlords inherently take advantage of tenants, overcharging to earn massive profits. 

In reality, owners of New York City buildings are burdened by annual increases in real estate taxes, insurance and maintenance. Many buildings include both stabilized and market-rate units. During a rent freeze, landlords will increase rent on market-rate units to offset the loss. 

The core unresolved problem a rent freeze fails to address is our lack of affordable housing.

Government regulation related to affordable housing, such as rent freezing, has historically been ineffective. For decades, New York has attempted to address the affordable housing supply through different laws and regulations without acknowledging the economic reality that landlords and developers need to make a profit. Although many of these efforts were well intentioned, the problems persist.

Meanwhile, across the country, we are seeing multifamily developments and much-needed affordable housing constructed in areas such as Tennessee, Texas, Florida, North Carolina and South Carolina, where there is zero rent regulation and much lower income taxes. These states are incentivizing developers and lenders to construct housing resulting in a win-win situation. 

New York needs to take notice and find a way to keep real estate investment capital here.

The government and private sector need to collaborate to find a reasonable balance so landlords can afford to operate and maintain existing multifamily buildings. The strategy must shift away from penalizing landlords to instead incentivizing landlords and developers to create affordable housing. The time has come for a balanced public-private partnership that benefits all.

Michael J. Romer is a real estate and finance attorney based in New York City and the managing partner of the law firm Romer Debbas.