New York City Needs a Smarter Way to Control Rents

New York City’s rent stabilization system is caught in an impossible bind. Every year, the Rent Guidelines Board studies the economic data and, consistent with state laws, votes on a single percentage increase to apply to roughly one million rent-stabilized apartments across all five boroughs. In 2025, they approved increases of 3% for one-year leases and 4.5% for two-year leases, and as always, both sides of the debate claim victory and defeat simultaneously.

Tenant advocates — and Mayor-elect Zohran Mamdani, who wants to freeze rent increases on these units for the next four years, regardless of what the data show — point to legitimate hardships. Over half of New York’s renters are cost-burdened by their rent, according to the State Comptroller’s Office. They’re not making this up.

But property owners also tell a true story: The RGB’s own reports showed a 6.3% surge in building operating costs, yet increases didn’t match that growth. Financial records from thousands of rent-stabilized apartments show dwindling cash, rising expenses and projections of deeper pain ahead. Many landlords are genuinely struggling to keep buildings maintained and financially viable.

How can both sides be right? Because we’re trying to solve a complex, varied problem with a single number. It’s time to change the law.

Three buildings, three realities

Consider three rent-stabilized buildings across the city, all subject to the same 3% rent increase:

In one building in Crown Heights, longtime tenants have lived in their apartments for decades, paying rents well below market rate. In recent years, these tenants have filed a sudden surge of 311 complaints (ranging from heat and hot water problems, broken boilers, water leaks, crumbling ceilings and construction dust) which housing advocates recognize as a result of deliberate neglect by landlords; conditions designed to drive people out so the building can be emptied and enter the open market. Those practices have been substantially curbed by 2019’s Housing Stability and Tenant Protection Act, which eliminated vacancy decontrol, and by a 2024 law that closed the “Frankensteining” loophole, where landlords would combine two previously rent-stabilized units into one open-market unit. Those laws are substantial steps in the right direction, but they also underscore the need for strong laws to curb those seeking to exploit the system for profit at the expense of residents. Meanwhile, in the Bronx, a family owns two small buildings that have been in their family for generations. They’re not wealthy; they’re struggling. With cash running low, they recently had to patch one building’s roof as a short-term fix rather than undergo the major repair it actually needs. They’re not trying to empty their buildings or flip them to luxury; they’re just trying to keep them standing. The same modest rent increase that does nothing to discourage the negligent landlord in Crown Heights also doesn’t give this family enough to replace a failing roof.

And then there are gleaming new developments in Gowanus, built by a large real estate firm with dozens of properties across the city. These buildings might have 200 units, including 20% designated as “affordable” under the city’s Mandatory Inclusionary Housing (MIH) program, meaning they’re rent-stabilized. These buildings typically have a 24-hour concierge, a fitness center, a roof deck, and professional management that responds to maintenance requests within hours. The developer has economies of scale, favorable financing and diversified holdings that cushion any individual property’s performance. For these buildings, the 3% increase is merely one line item in a sophisticated financial model.

This is the fundamental flaw of our current system: It treats these three radically different situations identically. The same percentage increase applies to a well-maintained building in excellent financial health and to one teetering on the edge of bankruptcy.

The problem with uniformity

A one-increase-or-freeze-fits-all approach creates perverse outcomes. Responsible landlords who’ve invested in their properties and maintained quality housing get the same modest increases as slumlords who’ve racked up hundreds of violations while extracting maximum profit. Some of the city’s most notorious landlords have accumulated hundreds of violations at individual buildings and even served jail time for their neglect. Yet, while neglecting their properties, they still collected the same rent increases as responsible owners.

The system rewards the worst actors and penalizes (or at least fails to reward) the best ones. And it provides the same increases to deep-pocketed institutional developers as it does to mom-and-pop landlords operating on razor-thin margins.

Meanwhile, tenants in poorly maintained buildings see their rents rise even as their living conditions deteriorate, while tenants in well-run buildings, whether a small family property or a professionally managed new development, may pay increases that exceed what’s actually needed to maintain their homes.

The numbers confirm what tenants and responsible landlords both know: Something is badly broken. Pre-1974 rent-stabilized units now have an average of 1.76 maintenance deficiencies — 75% more than newer stabilized units and 79% more than market-rate units. As of late 2020, between 65% and 85% of open Housing Code violations in rent-stabilized buildings across the five boroughs had remained unresolved for a year or more, totaling over 550,000 violations.

Yet the city already knows which buildings are the worst offenders. The Alternative Enforcement Program identifies 250 of the city’s most distressed buildings each year. These properties have nearly 40,000 open housing violations, including over 9,000 immediately hazardous conditions like mold, rodents, lead paint and lack of heat or hot water. These represent roughly 3-5% of the regulated stock where conditions are so egregious there’s no ambiguity about neglect.

A smarter framework

The solution isn’t to abandon rent regulation (though many economists and editorial boards have been saying for decades that that’s a better way). Affordable housing is too scarce and too critical to New Yorkers’ survival. But we need to move toward a system that recognizes differences in both building quality and financial circumstances.

The framework is straightforward: Tie rent increases to building conditions. Buildings in the Alternative Enforcement Program — the worst 3-5% with conditions beyond dispute — would receive zero rent increases until they come into compliance. Meanwhile, buildings meeting quality standards would receive adjustments that reasonably reflect operating cost increases.

This isn’t a radical concept. It’s basic market logic: You get paid for delivering a quality product. Right now, rent stabilization severs that connection entirely. Landlords get paid the same whether they respond to repairs in 24 hours or 24 months, whether their heating systems work reliably or break down every winter.

Creating differential rent guidelines would restore accountability. The RGB already establishes different rates for lofts versus apartments, and for different lease terms. Alex Armlovich, a member of the RGB, has made a good argument that this authority extends to creating distinctions based on building quality and maintenance records. The board could use its rulemaking process to establish tiers: Buildings in the Alternative Enforcement Program receive zero increases until compliance is achieved, while buildings meeting quality standards receive varied adjustments that reasonably reflect operating cost increases.

For the struggling family owners, this would mean the increases they receive actually help them afford the roof replacement their building desperately needs. For the tenants in Crown Heights, it would mean their negligent landlord stops profiting from deliberate deterioration. And for the well-capitalized Gowanus developer already maintaining a high-quality building, it would mean continuing to receive reasonable returns on a well-managed property while knowing that if standards ever slipped, so would their revenue.

Building a coalition

Incoming Mayor Zohran Mamdani won the Democratic primary and the mayoralty in part on promises to freeze rents for all four years of his administration. It remains to be seen whether such freezes, assuming he can get them through the Rent Guidelines Board, will hold up against court challenges; by law, increases or freezes are supposed to be driven by data, not preemptive political pronouncements. 

But assuming they do, a citywide freeze applied to all buildings also creates real risks. It could undermine housing quality and potentially force some smaller landlords into distress or sale.

Many owners took out loans assuming they’d eventually raise rents, but 2019’s Housing Stability and Tenant Protection Act closed those loopholes, leaving thousands of properties financially underwater as loans come due. A blanket freeze could accelerate this crisis.

Mayor-elect Mamdani has pointed to data showing that net operating income for rent-stabilized buildings increased by approximately 12% in recent years. But this aggregate figure obscures the reality: it lumps together all three types of buildings; the Crown Heights slumlord collecting rent while providing minimal maintenance, the struggling Bronx family owners and the well-capitalized Gowanus developer. It ignores that many buildings containing only rent-stabilized units are struggling financially even as others thrive. A targeted approach delivers on the promise without the collateral damage. Freeze rents for the worst landlords and those whose revenues are beyond healthy. Let responsible owners cover their costs. The message would be clear: We’re standing up for tenants by holding landlords accountable, not by pretending that every building faces the same circumstances.

As one housing industry observer noted, applying the same rate to every rent-stabilized unit “doesn’t make sense anymore. “We need rent increases “based on data and context.”

This also speaks to the economic diversity among property owners that’s often ignored in housing debates. Some landlords are institutional investors with deep pockets and professional management teams. Others are families who own a single building and depend on rental income for their own housing security. A system that distinguishes between operators who maintain their buildings and those who don’t is fairer to all groups than our current blunt instrument.

The path forward

The state can always change the law to allow such distinctions to be made, but we don’t have to wait on Albany. The Rent Guidelines Board can use its rulemaking authority to establish differential guidelines based on building quality and other criteria related to financial health. The enforcement data already exists: The Alternative Enforcement Program (AEP) maintains a publicly updated list of the city’s 250 most distressed buildings, refreshed annually based on violation records, making it straightforward to identify which properties should face rent freezes until they achieve compliance. The list could also easily be expanded as needed, if 250 buildings is deemed insufficient. The legal framework also exists. The RGB can set different rates for different categories. What’s needed is political will.

Yes, there are details to work out, but they are solvable. What’s not solvable is the fundamental contradiction of our current system: trying to regulate a million diverse apartments, in thousands of different buildings, owned by landlords with vastly different resources and motivations, with a single annual percentage.

Our city deserves a rent stabilization system sophisticated enough to match the complexity of the problem it’s trying to solve.

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