For Thousands of New York City Apartment Buildings, the Math Doesn't Math
Reason · RC · trust 51/100
(Illustration: Adani Samat/ChatGPT. Photo: Ryan Deberardinis/Dreamstime) "The math just doesn't math," says Sophia, a New York City landlord. All of her major expenses—insurance, labor, fuel, and property taxes—are going up. Now she can no longer cover those costs by raising the rent she charges.
When New York's Rent Guidelines Board (RGB) approved a rent increase of 0 percent in June, the city's new mayor celebrated with a frozen treat. A short video posted to social media shows Zohran Mamdani reaching into a freezer to grab an ice cream bar while announcing that the "independent" board froze rents for the 2 million tenants living in the city's nearly 1 million rent-stabilized apartments. Close to a third of all New York's homes are rent-stabilized.
"It might be hot outside but the rent is freezing," read the video caption on Instagram.
The vote was a major political victory for the mayor. Mamdani's left-wing platform included everything from free childcare to free city buses, but his need to balance the budget has largely prevented him from making good on promises that actually cost the city money. The rent freeze was one headline policy the mayor could enact without directly adding red ink to the balance sheet.
But that does not mean the freeze is costless. Instead, that red ink will show up on the balance sheets of the city's rent-stabilized buildings, an increasing share of which are losing money each year.
Close to 10 percent of New York's rent-stabilized buildings have operating costs that exceed their revenues. That's a near doubling of financial distress within just five years. Nearly 60,000 rent-stabilized apartments sit empty because their owners can't afford to renovate them and put them back on the market. Bankruptcies of rent-stabilized buildings continue to rise each year, with no sign of stopping.
Meanwhile, city reports and academic studies show a steady decline in the physical quality of rent-stabilized housing stock.
The cause of the financial and physical deterioration of New York's rent-stabilized apartments can be traced to a law passed in 2019 that aggressively tightened the state's rent regulation regime. That law eliminated most avenues through which owners could remove their apartments from rent stabilization. It also largely ended their ability to raise rents to cover repairs and capital improvements and to bring rents closer to market rates on vacant units.
Those changes set many buildings on the course to bankruptcy. It's in this environment of suppressed revenues and exploding operating costs that the Rent Guidelines Board—a majority of which was appointed by Mamdani—voted to freeze rents.
"[It's] not as if one singular decision, one rent freeze this year, is all of a sudden what puts us on this path. We have been on this path for the better part of a decade ," says Kenny Burgos, CEO of the New York Apartment Association.
For socialist activists in and outside of the Mamdani administration, the financial ruin of privately owned rent-stabilized housing is all to the good. It represents a needed correction to the alleged "speculation" that drove building values too high, they say. If buildings go bankrupt, the argument goes, nonprofits or the city itself can take them over.
But even nonprofits are struggling to maintain rent-stabilized buildings in the face of rising costs and frozen rents. The rent freeze is one more s
That would be another financial headache for the city's mayor—worse than an ice-cream-induced brain freeze.
Before the Rent Guidelines Board issues its final decree on rent increases, it holds a series of public hearings every year.
Tenant activists who oppose any rent increase on principle come out in force to make their voices heard. The result is usually a circus, but this year it was more of a horror show.
At the RGB's Brooklyn hearing in mid-June, the "eat the rich" protesters were joined by a horde of zombies who wanted to eat anyone, anyone at all. The zombies were, in fact, actors hired by the Gotham Housing Alliance, a landlord trade association, to serve as a colorful living representation of "zombie" rent-stabilized apartments—units that sit empty because owners can't make a profit by fixing them up and putting them back on the market.
In 2025, an estimated 57,000 rent-stabilized apartments sat vacant in New York City, according to public records obtained by The City Reporter . About 5.6 percent of rent-stabilized apartments are housing no one— five times the rent-stabilized vacancy rate reported by the previous Housing Vacancy Survey, conducted by the U.S. Census Bureau in 2023.
It may seem bizarre that below-market apartment buildings in New York City, which has some of the highest market rents in the world, would stay vacant. But property owners have a straightforward explanation for this economic oddity: The 2019 rent laws eliminated the "vacancy bonus" rent increases landlords could charge on empty units.
That change made it completely uneconomical to bring online apartments that become vacant after a long tenancy.
A well-documented effect of rent control is that tenants stay in their units for longer. For tenant activists, this is a primary benefit of the policy: "stability" for people who might otherwise leave because of rising rent.
In New York, the longer a rent-stabilized unit is occupied by the same tenant, the bigger the gulf between the rent the landlord can legally charge and the rent the apartment could fetch in the open market. Under the pre-2019 system, this was a less severe problem. Once a long-occupied unit was vacated, the landlord could claim the automatic 20 percent vacancy rent increase. The costs of renovations could also be factored into the rent the next tenant would pay.
But the 2019 changes ended vacancy bonuses and capped the renovation costs at that could be passed on at no more than $15,000 (later raised to $50,000 for renovations on empty units). Those would have to be spread…
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