Rent Guidelines Board Vote Sends New York’s Landlords Into Uncharted Territory

With the recent 7-1 vote by the New York City Rent Guidelines Board (RGB) to freeze rents for both one- and two-year leases on rent-stabilized apartments in the city, two things seem likely.

The first is that, from offering free child care to freezing the rents, New York City Mayor Zohran Mamdani seems determined to keep the promises he made on the campaign trail.

The second is that lawsuits from angry landlords and landlord advocacy groups, who make the case that the city’s owners cannot maintain upkeep on rent-stabilized apartments without rent increases, are almost certain to follow, with Mamdani’s own promises one possible weapon in the legal arsenal against him.

“This is a decision that was predetermined based on the mayor’s wishes, as he built the board to deliver what his wishes were,” said Kenny Burgos, a former New York State Assembly representative who currently serves as CEO of the New York Apartment Association, an advocacy group for landlords of affordable housing in New York City. 

Burgos is referring to Mamdani’s February appointment of six new members to the RGB, including new Chair Chantella Mitchell, a former executive director of the city’s Department of Housing Preservation and Development, following a string of resignations. 

“I’m confident that, under the leadership of Chantella Mitchell as chair, the board will take a clear-eyed look at the complex housing landscape and the realities facing our city’s 2 million rent-stabilized tenants, and help us move closer to a fairer, more affordable New York,” Mamdani said in a statement at the time. “At a moment when so many families are struggling to stay in their homes, this work could not be more important.”

Burgos also points, as many surely will, to the resignation of RGB member Christina Smyth the morning of the vote.

Smyth, an attorney for landlords and a landlord representative on the RGB who was appointed by then-Mayor Eric Adams, said in her resignation letter that the RGB had “stopped being a fact-finding body,” and had instead become “a body that starts with an answer and vibe-codes its way backward to justify it.”

Noting that Mamdani had appointed six of the board’s nine members, Smyth wrote that the board had crossed a “legal line,” adding that “this rebuilt board was required to deliver a rent freeze. Everything since has been theater.”

Between Mamdani’s explicit campaign promises and Smyth’s resignation, it’s easy for people in the industry to conclude that the fix was in on the rent freeze vote.

“Mamdani campaigned on a rent freeze. He made no secret about it,” said Zachary Rothken, head of the administrative law department at the law firm Rosenberg & Estis, whose practice focuses on issues related to rent stabilization and rent control. “When you campaign for a rent freeze, the only way to achieve that as mayor is to make sure that people on the board vote for that rent freeze. But the statute requires the board to consider actual data in setting the rent guidelines.”

In addition to his legal expertise in this area, Rothken is a member of the Rockland County Rent Guidelines Board. The night before we spoke, he and his board voted for rent increases of 5 percent for one-year leases and 6 percent for two-year leases in the New York county.   

Rothken also believes that Mamdani’s appointments, which included both landlord and tenant reps as well as the required public members, were people who “were going to carry out his predetermined rent freeze from his campaign.”

“I reviewed the data that New York City provided to the RGB,” said Rothken. “There was even a document that’s available online, published by the RGB, where they provide commensurate rent adjustment formulas based on the data, and those range between 3.4 percent to 4.5 percent for a one-year lease, and 4.8 to 8.5 percent for a two-year lease. So, to just go ahead and vote 7-1 on the 0 percent and 0 percent [increases] reeks of predetermination, and total non-consideration of the data as required by law.”

The document Rothken referred to is the “2026 Price Index of Operating Costs,” one of seven different data-filled documents on the RGB website available for the board to consider in making its decision.

The problem with all that data, though, is that with so much information to sort through, the facts can be made to support various positions.

City Councilman Harvey Epstein, a former tenant representative member of the RGB, hailed the vote as “a historic moment” that “helps families stabilize.”

Epstein also mentioned the RGB data — in this case, to support the freeze.

“On the landlord side, we see income for landlords and property owners across the board continue to go up,” said Epstein. “If you look at net operating income for property owners, their income went up by 6 percent. That means they’re making more than they made the year before.”

As Epstein noted, according to the “2026 Income and Expense Study” on the RGB website, net operating income (NOI) for buildings containing rent-stabilized units increased 6.2 percent, or 2.2 percent after adjusting for inflation, marking the third consecutive year of increased NOI for landlords. (The information in that report is from 2024, the latest year such data is available.)

Breaking it down by borough, the report noted that NOI for landlords in Staten Island rose by 15.1 percent, followed by 10 percent for Manhattan south of West 110th and East 96th streets, 9.1 percent in Upper Manhattan, and 6.8 percent in Queens. Brooklyn and the Bronx drove the average down with a rise of 4.4 percent and a drop of 0.1 percent, respectively.

Noting some of the outlier neighborhoods, the report states that NOI for landlords in Midtown Manhattan increased by 17.4 percent.

Epstein also mentioned the tenant side of the expense ledger — also part of the to-be-considered data — indicating a level of expense that could be considered shocking. 

“If you look at the tenant-side data, 50 percent of tenants are paying more than 30 percent of their income toward rent, and a third are paying more than 50 percent,” said Epstein. “You have to balance the equities here, and you can see that landlords are doing better, and more and more tenants are falling behind. That’s the balancing the board is doing, and with real data. They’re making a well-informed decision.”

To pinpoint it more precisely, the “2026 Income and Affordability Study” on the RGB website notes that “data from the 2025 American Community Survey shows that 51.6 percent of NYC renter households pay 30 percent or more of their income toward rent, including 28.8 percent that pay 50 percent or more.”

To bring some perspective to these numbers, a joint study from the Columbia University Center on Poverty and Social Policy and the poverty-fighting organization Robin Hood released just three days before the RGB vote found that “between 2022 and 2024, the poverty rate among rent-stabilized tenants would have been roughly 8 percentage points higher absent [the rent-stabilization] policy (37 percent versus 29 percent), translating into 140,000 New Yorkers kept out of poverty every year.”   

“We hope this data gives the Rent Guidelines Board a clearer picture of who lives in rent-stabilized housing and what is at stake for them,” Richard R. Buery Jr., CEO of Robin Hood, said in a statement at the time. “New York City faces a profound affordability crisis — families in stabilized apartments are already cutting back on food, utilities and basic necessities just to stay housed. We know the board must weigh a number of factors as it makes its decision, and we want to make sure they do so with the best evidence available.”

It’s also worth noting that Mamdani, despite clear pro-tenant inclinations, has not turned a completely deaf ear to landlords’ complaints of rising costs.

Mamdani announced back in April that the city was creating a program to help mitigate the rising cost of property and liability insurance, which has tripled since 2017, according to the mayor’s office. The program aims to “issue new insurance policies for 20,000 homes next year and 100,000 homes by 2030,” and is intended to be self-sustaining.

“We cannot take on the housing crisis without confronting one of the fastest-growing costs facing New Yorkers: insurance,” Mamdani said in a statement at the time. “That’s why we’re creating the first city-backed insurance program — to help New Yorkers stay in their homes, give building owners the support they need to make repairs, and build a city that New Yorkers can actually afford.”

But Burgos noted that this effort is far too small to have a significant effect, at least at the present time.

“The mayor’s own projections show that they intend to help 20,000 units in the near future when there are 1 million unstabilized apartments,” said Burgos. “It’s barely a drop in the bucket.”

There is also the issue, as many on the landlord side have said, that there were approximately 57,000 rent-stabilized units in the city going unused as of April 2025, according to New York State. While this number included as-yet-unleased units in new buildings and those unoccupied due to regular turnover, it’s still high enough to cause concern. And the number is rising, with an increase of approximately 8,000 last year, according to Gothamist.

While these ambiguities make it impossible to know exactly how many apartments are actually being warehoused, advocates for owners say that for many rent-stabilized apartments, the cost of needed renovations is high enough that stabilized, frozen rents won’t cover them. Therefore, it’s cheaper for landlords to keep some of these units off the market in perpetuity, a potentially crushing blow to attempts to resolve the city’s housing crisis.

“Our concern is that we will not have the infrastructure to support some of the buildings that are already in financial distress,” said Carlina Rivera, a former City Council member who now serves as president and CEO of the New York State Association for Affordable Housing, an advocacy group for developers, lenders and others involved in the creation of affordable housing.

“We want to make sure that going forward, the Rent Guidelines Board takes into full consideration the financial viability of affordable housing,” said Rivera. “We feel that’s a critical factor in sustaining the existence of rent-stabilized apartments, and we need a lot of work to come out of City Hall to address the rising costs. However, this vote is going to cause a bit of chaos in terms of how people are looking at the future. Some are afraid they won’t make it to the other side, that they’re not going to survive the next few years if this continues.”

Some also believe that the RGB vote will have ramifications beyond rent stabilization.

Zachary Nathanson, a senior associate at the law firm of Adler & Stachenfeld who represents owners, lessees, lenders, borrowers and developers, sees the potential for market-rate tenants to carry the cost burden avoided by rent-stabilized tenants.

“This vote is like a Band-Aid, treating the symptom instead of the disease,” said Nathanson. “Rents are high, but the problem is that by freezing them, you’re cutting off potential revenue for upkeep and day-to-day maintenance, and you’re also potentially passing those increases in costs to the non-rent-stabilized tenants.”

Given various recent moves by the city to help ease tenants’ financial burdens, there is also the thought that the RGB vote may not mean as much as some think. That’s because, when it comes to conducting business around the city’s affordable housing stock, much of the damage has already been done.

Stuart Boesky is the CEO and founder of national affordable housing lender Pembrook Capital Management, which has invested nearly $2 billion in around 15,000 affordable housing units over the past few decades. Boesky previously ran the affordable housing business at Related Companies.

“If you put money into your properties, you can only get roughly a 6 percent return, which is less than borrowing costs today,” said Boesky. “So no owner can afford to willfully invest money in his properties anymore, because he’s earning way below his cost of capital return.”

That said, Boesky noted that the big event driving him away from focusing on New York multifamily happened years before this new RGB vote.

“Prior to 2019, about 40 percent of our lending was in New York. After 2019, we largely stopped lending in New York because of the changes in the law,” said Boesky, referring to the Housing Stability and Tenant Protection Act of 2019, which strengthened protections for rent-regulated tenants in the city. “Today, we have loans or preferred interest in about 2,000 units in New York City.”

Boesky believes that given the damage already done to the market, the new RGB vote is a mere drop in the bucket from a lender perspective, and it reinforces his decision to mostly get out when he did.

“The chilling effect of both the 2019 law and the current political environment has already had all the impact it’s going to have on banks, private equity and all the other lenders,” said Boesky. “The capital markets have already largely avoided making a lot of new loans in New York.”

Larry Getlen can be reached at lgetlen@commercialobserver.com.