Mamdani’s rent freeze: Politics, policy, and the fate of small property owners

Zohran Mamdani, winner of New York City’s Democratic mayoral primary, has built his campaign around a striking pledge: a four-year rent freeze on New York City’s nearly one million rent-stabilized apartments. Tenant advocates estimate that such a freeze could save renters as much as $6.8 billion over four years, which also means it could cost rental property owners $6.8 billion over four years. A rent freeze may also unravel the city’s already strained housing market by cutting off the primary source of revenue owners use to pay for taxes, maintenance, and debt service. Mamdani should reconsider his promise and these catastrophic consequences and look at other ways to expand rental affordability.

Although legally, a mayor cannot unilaterally halt rent increases, New York City’s Rent Guidelines Board (RGB)—the body that sets annual increases for stabilized units—is entirely appointed by the mayor. A determined mayor can effectively engineer a freeze, as Bill de Blasio did in 2015, 2016, and again in 2020 during the pandemic. These freezes slowed rent growth for stabilized units: while the Consumer Price Index rose by more than 27% between 2013 and 2023, stabilized rents increased by less than 12%. For landlords, especially in older buildings, it translated into widening gaps between income and expenses.

Even before Mamdani’s proposal, landlords were grappling with the aftershocks of the 2019 Housing Stability and Tenant Protection Act (HSTPA), which eliminated nearly all the mechanisms that once allowed modest rent increases in stabilized apartments. For decades, landlords could apply vacancy bonuses, raising rent by up to 20% when a tenant moved out to cover turnover costs and reduced the incentive to hold apartments off the market. They could recover expenses for improvements, either through individual apartment improvements (IAIs) like kitchen or bathroom upgrades, or major capital improvements (MCIs) such as boilers or roofs. These provisions had encouraged reinvestment in the city’s aging housing stock.

HSTPA effectively abolished vacancy bonuses and drastically limited the ability to recoup IAI or MCI costs. According to Columbia Business School, the result was a “dramatic increase in deferred maintenance” and a surge in warehousing (simply not renting units because the cost of doing so is more than the potential income). Ann Korchak, board president of the Small Property Owners of New York (SPONY), underscores the point, explaining via email that “over 50,000 apartments are empty because they don’t have the financial resources for required upgrades after a tenant vacates.” Those 50,000 units represent roughly 5% of the city’s rent-stabilized stock, a striking share of housing kept offline due to financial constraints.

The financial strain is compounded by debt. Columbia estimates that $105 billion in loans are secured by 26,000 rent-stabilized buildings. This isn’t caused by HSTPA per se, but the law has made refinancing or restructuring debt far harder because the expected income from stabilized units is now capped. With lenders pulling back and property values falling, owners in places like the Bronx now find that average sales prices per square foot have dropped to the same level—or below—their outstanding debt, leaving many properties with zero or negative equity.

For buildings that are 100% rent-stabilized—meaning all units fall under stabilization rules with no market-rate tenants to offset costs—the risks are even sharper. Columbia models show that a four-year freeze would create a structural decline in net operating income (NOI). Even if rents were allowed to rise modestly afterward, NOI would never fully recover, permanently reducing property values. In harsher scenarios—such as expenses rising 5% annually while rents remain frozen—NOI turns negative within 16–17 years, effectively making the property worthless. In reality, many owners would face insolvency and distress sales long before that point, as operating losses mount.

Critics of the real estate industry often portray landlords as deep-pocketed corporations or hedge funds, but the reality of New York’s housing market is more complex. According to The Wall Street Journal (WSJ), “mom-and-pop” landlords may own a single six-unit building in Brooklyn, or a small multifamily in the Bronx, and they manage them not as faceless investment vehicles but as their primary source of income or retirement savings.

One Brooklyn landlord, Ebony Hannibal, exemplifies the bind. She owns a four-unit building and struggles to make her $3,800 monthly mortgage while pursuing tenants who collectively owe nearly $100,000 in back rent. Hannibal told the WSJ that if Mamdani’s freeze becomes reality, she plans to sell her building. But you must wonder who would buy it if the rents do not cover the costs. Her story is not unusual—“every single landlord in my neighborhood has similar experiences,” she said.

Unlike large institutional investors who can spread losses across portfolios, mom-and-pops often have all their wealth tied up in one or two buildings. When costs rise but revenues are capped, they have no cushion. As WSJ reports, many of these owners are already walking a financial tightrope. Rents often barely cover the basics: mortgage payments, property taxes, utilities, and rising insurance premiums.

The broader market reflects these struggles. Sales of rent-stabilized properties have slowed since the 2019 rent law changes, and many listings linger on the market far longer than typical. To attract buyers, sellers are cutting prices by around 10% on average. For small owners hoping to sell or refinance, that erosion in value directly threatens their financial survival.

It’s no wonder that one lender described Mamdani’s plan as “the kiss of death” for small landlords. Unlike large investors, who may warehouse units or sit on losses, small owners often face a binary choice: raise rents modestly to keep pace with expenses or lose their buildings. A multi-year freeze removes that choice altogether, leaving foreclosure, distress sales, or abandonment as the only options.

For tenants, the picture is equally bleak. When landlords cannot afford upkeep, it is renters who remain in deteriorating apartments with broken boilers, leaky roofs, or unsafe wiring. Rent freezes also pit tenants and owners against each other over shrinking resources, and by locking some households into large apartments they no longer need, they squeeze families with children into smaller, less suitable units. Far from helping renters, the freeze risks degrading their living conditions. And more warehousing of units just means fewer affordable rental units and more renters left out of the market entirely.

An emailed comment from Korchak cuts to the heart of the issue: “Let’s accurately identify Mamdani’s housing agenda—it’s not policy, it’s housing politics.” She warns that a four-year freeze would trigger “affordable housing Armageddon,” pushing thousands of small buildings into foreclosure. Widespread foreclosures would hit the city’s finances twice over: first, through tax delinquencies as struggling landlords fall behind, and second, through falling assessments as distressed sales depress property values. And while buildings would eventually be resold, the transition often means prolonged vacancies and the loss of small, active landlords who keep units on the market, replaced by speculative owners more willing to hold apartments empty.

Instead of political promises, Korchak argues for pragmatic reform. Specifically, she calls for amending the 2019 HSTPA provisions that restricted the amount of money owners can recoup from their improvements and capital investments to the units (IAIs and MCIs) to allow owners to bring over 50,000 warehoused apartments back to market quickly. “That would make an impact on affordable housing,” she emphasizes, far more than new construction schemes that take years, if they happen at all.

Mamdani’s rent freeze pledge has undeniable populist appeal in a city battered by high rents. But the evidence from Columbia, testimony from small owners, and the warnings of advocates like Ann Korchak suggest that such a freeze would backfire—deepening disrepair, bankrupting mom-and-pop landlords, and ultimately shrinking the affordable housing stock. If the goal is truly to help tenants, reforming HSTPA to unlock existing units may be a more immediate, effective, and sustainable path.

The post Mamdani’s rent freeze: Politics, policy, and the fate of small property owners appeared first on Reason Foundation.

Source: https://reason.org/commentary/mamdanis-rent-freeze-politics-policy-and-the-fate-of-small-property-owners/