Rent-Stabilized Buildings Saw Income Rise in 2024, Says RGB

Advocates, start your engines. The race to a rent freeze has begun.

The Rent Guidelines Board, which controls prices for rent-stabilized apartments, on Thursday released its annual report on landlord profits and expenses. This year’s Income and Expense Study found buildings’ net operating income — revenue after day-to-day expenses — increased 6.2 percent between 2023 and 2024 when adjusted for inflation. Adjusted for inflation, that’s about a 2.2 percent rise.

But the rise in income wasn’t across the board. While net operating income rose 10 percent in core areas of Manhattan, it declined one-tenth of a percent in the Bronx. Adjusted for inflation, that’s a loss of about 4 percent. In some areas, that loss of net income was much higher. Hunt’s Point in the Bronx saw net operating income fall more than 13 percent, before adjusting for inflation.

Brooklyn and Queens saw nominal net operating income increases of 4.4 percent and 6.8 percent, respectively.

Board members are meant to use the data to inform the level of rent increases they’ll allow in New York’s approximately 1 million rent-stabilized units. But this year is likely to be different. Mayor Zohran Mamdani ran a successful campaign that centered four years of rent freezes for these units and in February appointed a board to get that job done.

Even as landlord groups decry the data as out of date and oversimplified, it’s ammunition for tenant advocates pushing the board to follow through on the mayor’s promise.

Net operating income is an imperfect measure of profitability. It doesn’t include debt service and, at least as the Rent Guidelines Board measures it, major capital expenses.

Landlord groups have long said the topline data obscures the facts on the ground. Not only is the data two years old, because of how the Rent Guidelines Board collects information, but it also lumps together vastly different kinds of properties.

Newer buildings that included affordable units in exchange for property tax abatements typically have higher revenues than older buildings outside of the core of Manhattan. That’s in part because the older buildings have fewer market-rate units than newer properties to offset the regulated ones.

The report showed buildings with higher levels of rent-stabilization had lower increases in net operating income. Those buildings that are 80 percent rent-stabilized saw NOI grow 3.5 percent, about three percentage points lower than the total survey average. Those that were 100 percent rent-stabilized saw NOI increase by only 2.5 percent.

Landlord groups say distress has been rising in rent-regulated buildings. The hikes by the RGB haven’t been able to keep up with sharply rising expenses, driven by insurance and energy costs, for older, deteriorating properties. Statewide legislation passed in 2019 hasn’t helped landlords’ situation. The Housing Stability and Tenant Protection Act placed stringent restrictions on how landlords can raise rents, take units out of rent-stabilization, or charge for major improvements.

Nine percent of buildings in the study are distressed, a decline of one-tenth of a percent from the prior year. About 37.5 percent of distressed properties are in Manhattan, while 34.5 percent are in the Bronx.

The numbers released Thursday are just the beginning of the board’s annual procedures. The next few months will be filled with more meetings and reports, leading up to the board’s final vote in June.