Landlords cannot skirt the Rent Guidelines Board process

Does Mayor Zohran Mamdani want to make some landlords exempt from a rent freeze? Not according to his housing plan.

When the Mamdani administration unveiled the 112-page document on Tuesday, one proposal captured significant attention: the idea that affordable housing landlords would be allowed to skirt the Rent Guidelines Board process and raise rents on vacant units.

The concept was the subject of a Wall Street Journal exclusive published the same day, but the policy is not actually mentioned or presented in the plan document.

The administration has since clarified the practice actually refers to a “longstanding tool.” Leila Bozorg, the deputy mayor for housing said the WSJ story referred to loan modifications with affordable housing operators in the city’s portfolio. When the Department of Housing Preservation and Development modifies a loan, it has the option to “restructure” the rents.

“It is something HPD has used in very minimal situations for many years,” Bozorg said on NY1.

Units that are part of HPD’s loan portfolio are subject to regulatory agreements with the city. Those agreements tie rent increases for those units to what the Rent Guidelines Board allows for rent-stabilized apartments. That makes the two systems, rent-stabilized and affordable, separate but parallel.

Because rent increases allowed by the board can be limited, rents in older affordable units can sometimes lag behind what a new affordable unit would be legally permitted to rent for. If a loan is modified and rents restructured, an operator could increase the rent for a vacant unit, but only up to what a new affordable unit with the same income restrictions would rent for.

Loan modifications and rent restructuring didn’t make the cut for what the Mamdani administration put in its public plan document. Officials have not said they plan to ramp up the practice.

“This is not a new tool,” Bozorg said on NY1. “This happens on really rare occasions.”

The WSJ article also made reference to “a number of other lifelines for struggling landlords of affordable housing,” that were included in the plan. Dow Jones, the publisher of the Wall Street Journal, did not immediately respond to a request for comment.