Revenue Boost for Rent-Stabilized Landlords Appears Unlikely

Data released by New York’s Rent Guidelines Board, which sets rent increases in the city’s nearly 1 million regulated apartments, is something of an Rorschach test. Everyone sees what they want to see.

Tenant advocates seize on the topline number: a 6.2 percent increase in net operating income across the city’s rent-stabilized buildings, marking the third year that reported number has been positive. Low-income tenants are hurting, they say, and landlords can afford the freeze.

Landlord groups look deeper for their talking points. Not only does net operating income not include major capital expenses and debt service, they note in their statements, but the data don’t reflect the reality of all housing.

In the Bronx, for instance, net operating income fell roughly 4 percent after adjusting for inflation. Older buildings in the borough saw their net operating income decline by 30 percent from 2021 to 2024, according to an analysis of the data by the New York Apartment Association, which represents rent-stabilized landlords. In the interpretations by landlord advocates, nobody wins.

The question is, what will the board’s members see in the numbers? They’re the ones tasked with translating the report into policy and setting rent increases for roughly 1 million rent-stabilized units in New York.

Mayor Zohran Mamdani arrived in Gracie Mansion with a promise to freeze the rent, and appeared to move in on that goal in February when he appointed a majority of the board. If his members intend to buck that mandate, or back some other support for landlords, they haven’t made that known. As their Thursday meeting opened up for discussion, the members were silent.

But it’s a critical moment for the members to shape multifamily housing in the five boroughs. And politicians and advocates are no longer able to entirely ignore the rent-stabilized landlords that have been pushed to the brink.

Older, pre-1974 buildings that are over 90 percent rent-stabilized have seen the most acute challenges, along with government-subsidized affordable housing, which is income-restricted, Mark Willis, senior policy fellow at the Furman Center, said at the board’s meeting.

One line of thinking that seems to be gathering support among the more progressive edges of the debate is that a rent freeze could be paired with some sort of targeted relief for owners in distress. About nine percent of rent-stabilized buildings are in distress, according to the Rent Guidelines Board, although their survey does not include buildings with fewer than 11 units.

“In certain cases where it does feel like there’s something more specific happening, we should use a targeted approach to deal with those kinds of buildings,” said Sumathy Kumar, director of New York State Tenants Bloc.

That statement echoes what then-city comptroller Brad Lander told The Real Deal at the board’s vote last summer.

“It’s a relatively small percentage of the portfolio,” he said. “To stick all New Yorkers with a big rent increase because there are a small percentage of buildings that need a program to address distress, it’s just a trick.”

But despite reports of distress and talk of some sort of targeted relief, there have been few to no real proposals for even a selective approach to help rent-stabilized owners.

The closest thing to an idea for a targeted approach has come from board member Arpit Gupta. The proposal is for a freeze only on buildings with high levels of housing code violations. Increases for other buildings would be pegged to owners’ operating expenses, as detailed in former board member Alex Armlovich’s letter resigning from the position.

That sort of approach is unlikely to placate either side.

The distressed buildings in the Bronx aren’t unique, said Kenny Burgos, CEO at the NYAA. They’re a warning sign.

“The tenant advocates, I’ve realized, can no longer dismiss and try to claim that this distress is not happening,” he said. “They’re now trying to box distress into a small subset of the market. But you can’t do that.”

At least some part of the pain felt by rent-stabilized landlords is connected to serious declines in the values of their buildings. Prices tanked after the state passed major legislation in 2019, making it nearly impossible for landlords to raise rents, deregulate units, or charge for capital improvements. That left building owners with debt they could no longer afford and buildings worth less than their loans.

“The issue of debt service is a major issue,” Emily Eisner, chief economist at the Fiscal Policy Institute, told the board at its Thursday meeting. “But it’s one I would see as separate from the specifics of rent increases this year.”

If any help for landlords is on the way, it has yet to come into view.

For the mayor’s part, he seems to have cooled his rhetoric around a rent freeze. In a video posted to X, he said the board is “an independent body that considers the evidence when they make their decision.” He referred only obliquely to his promise of four years of zero increases.

“You know how I feel about what should happen to the rent,” he said. “But this is your chance to have your voices heard by the people who make the final decision.”