An agenda to fix New York City’s stabilized housing
The Rent Guidelines Board, on which I serve, has just voted to freeze rents on New York City’s roughly 1 million rent-stabilized apartments, fulfilling a key campaign promise by Mayor Zohran Mamdani. This settles what will happen to rents this October, but raises the question of whether the rent-stabilized stock is still going to be standing, habitable and occupied in 2046. On its current trajectory, a large share of it will not be — especially if Mamdani and his appointees on the Board follow through on the mayor’s pledge to freeze rents every year of his term.
One mistake we often make with rent-stabilized housing is to talk about it like it’s a single thing. This stock is at least two things headed in opposite directions.
The first part of the rent-stabilized stock is mixed buildings: units with regulated rents which sit alongside market-rate units. This happens when rent-stabilized units are deregulated over the decades, or in newer apartments built with tax incentives which mixed these two units from the beginning. There are roughly 200,000 such units. When operating costs rise for these buildings, as they have risen relentlessly in recent years due to the increasing price of insurance, taxes, energy and labor, the market units absorb the shock and cross-subsidize the regulated ones. A rent freeze on the owners of these buildings pinches the owners at the margin, but does not really threaten their existence. A recent Moody’s report affirmed the financial health of these buildings even with a rent freeze.
The distress is instead entirely contained elsewhere.
The second type of rent-stabilized building is entirely or almost entirely rent-stabilized. These buildings were typically built before 1974 and are located outside of lower Manhattan, disproportionately in the Bronx, Upper Manhattan, and central Brooklyn; they became rent-stabilized in their entirety after the passage of Rent Stabilization Laws in the late 1960s and early 1970s. The NYU Furman Center refers to these as the “legacy 90%+” segment. They count roughly 456,000 of these units, close to half of the stabilized stock. These buildings have no market cushion to absorb costs, with the below-median rent buildings within this segment facing particularly dire financial pressure. And, after New York State’s 2019 Housing Stability and Tenant Protection Act stripped out landlords’ ability to raise rents between tenants, high rent deregulation, and the ability to increase rents to help pay for substantial capital improvements, the Rent Guidelines Board became essentially the only way these buildings have of raising revenue.
The numbers on these buildings have gone from worrying to alarming. The Community Preservation Corporation, a substantial nonprofit lender to rent-stabilized buildings, estimates that it costs $1,250 per month to run an older multifamily building, while the Rent Guidelines Board’s data puts the median collected rent in pre-1974, fully stabilized buildings at $1,343 citywide, and just $1,212 in the Bronx. This leaves just a minimal financial cushion before debt service on the buildings and negative cash flows in the Bronx. The Citizens Budget Commission estimates that the nominal net operating income in pre-1974 stabilized buildings outside Core Manhattan fell 9% between 2020 and 2023, even as it rose for buildings in the first category of rent-stabilized buildings, those with market-rate offsets.
We already see disturbing signs of these crushing economics. The Furman Center has highlighted lower spending on maintenance over the years, as owners cut back on these buildings. Especially worrying is the number of stabilized units registered as vacant with the State, which rose from around 49,000 in April 2024 to over 57,000 in April 2025. Some of these vacant units reflect normal turnover and new buildings in lease-up, but the risk is that a growing number of them describe apartments for which renovation costs exceed any income the unit can legally generate. In other words, they’re apartments that it simply doesn’t make any financial sense for the landlords to keep inhabited. This represents a huge loss of naturally occurring affordable units unavailable to tenants, and, if it persists, offsets the supply increases the city can achieve elsewhere.
Both parts of the stabilized stock — one half with a natural shock absorber in the form of market-rate units, and another which has essentially no other way to make up the gap — are hit with the same freeze. For the latter, the system risks entering a doom loop: Costs keep going up and revenue does not, so maintenance is the only margin left to cut until conditions decay and the units exit through vacancy, deterioration and ultimately a lien sale or in rem foreclosure until the apartment becomes property of the state. The lesson from the 1970s Bronx is that this process can happen faster than you think.
The average sale price of buildings with any rent-stabilized units declined from $398,181 in 2019 to $289,478 in 2025 (a 28% decrease) and was just $146,038 for pre-1974 buildings with at least 50% stabilized tenants. Many advocates and politicians like to quote statistics that show that profits on rent-stabilized buildings as a whole have risen. While technically true, this estimate is misleading about a large segment of the stock. In reality, the mixed buildings have done quite well, while the pre-1974, highly stabilized segment of the stock has seen substantially deteriorating financial conditions. This diverging status makes it even harder to impose one-size-fits-all solutions to the entire stock of rent-stabilized housing. City subsidies can arrest this decline, but at the cost of diverting financial resources that could be otherwise deployed for means-tested housing vouchers or expanding the supply of affordable housing.
This diagnosis tells us that the part of the stabilized stock that works well financially is mixed-income buildings, because internal cross-subsidy is the cheapest affordable financing tool we have. These buildings also work socially. A deep body of research finds that economically integrated buildings and neighborhoods produce better outcomes for low-income kids than concentrated low-income housing, however well-maintained. Income-segregated buildings, whether in NYCHA or rent-stabilized housing, represent both a long-term fiscal drag as well as bad social architecture.
The agenda to fix this situation should therefore be to deliberately convert more of this distressed monoculture into mixed-income units while protecting sitting tenants. What would that look like?
Allow limited vacancy resets, but in a mix-and-match way. The 2019 reforms ended the vacancy bonus, which was misused to harass tenants out and lift the building out of rent regulation entirely. But there is a better design. Give fully stabilized buildings a building-level affordability budget, expressed in Area Median Income (AMI) bands. This is the standard metric for housing affordability set by the federal Department of Housing and Urban Development. For 2025, the threshold is $145,800 for a three-person family in the NYC metro area, so a housing unit “at 30% of AMI” is reserved for a household earning $43,700.
The idea is to enforce affordability by first translating existing rents into the AMI bands they correspond to, and treat this as a fixed affordability budget the building must stay within. Within that envelope, an owner may reset a vacant unit to market, but only within limits so that another vacant unit must be repriced to deep affordability.
Imagine a 100-unit, pre-1974 building in the Bronx that is fully stabilized and losing money. Suppose its rents cluster in the low bands: say 20 units at or below 30% of AMI, another 50 between 30% and 40%, 25 between 40% and 60%, and a handful above that. Seventy of the hundred units are affordable at 40% of AMI or less, while the median collected rent sits around $1,300, and operating costs now surpass this number. A vacancy opens in a unit renting at roughly 35% of AMI ($1,250). Under today's rules, the owner must re-rent at the same regulated rent, and the building continues to face losses.
Under this proposed framework, the owner may instead reset that unit closer to market — say 80% of AMI, or $2,900 — but only by pairing it with a deepening: A separate vacant unit currently renting at 55% of AMI ($2,000) is permanently repriced down to 28% of AMI ($1,000). The owner nets about $650 a month on the pair, addressing the building's gap, while the tenant population gets access to a new, deeply affordable housing unit. And most importantly, the gain makes it viable for the two units to reach tenants in the first place, while they may remain persistently vacant absent any policy change.
This process would basically replicate the basic economics at play in buildings with inclusionary zoning or “mix and match” programs administered by HPD. Owners gain because they are able to recoup more on a vacant unit, which will help pull some of the 57,000 units back to the market. However, any gains there will be offset by deep affordability gains on other units, which helps tenants.
Compliance could run on the same principle as the conditions-based guideline proposed below: Resets are audited annually against the covenant and frozen in buildings that fall into serious disrepair, so the new revenue is always contingent on the building holding up its end. An alternative, as former Rent Guidelines Board member Alex Armlovich has suggested, would be to set a weighted average AMI for the building’s entire rent roll, so that new vacancies would be able to convert to higher rents only if they do not cause the building to exceed a certain average rent level, relative to local incomes. While both approaches can work, NYC faces a critical shortage of deeply affordable housing units, and given high construction costs faces few routes to generating more. Therefore, pairing deep affordability with some higher-value units generates a real public benefit while ensuring the buildings stay solvent. However, the AMI-weighted average version is a reasonable option as well, and the two options could even be combined.
Let stabilized buildings build up. Currently, rent-stabilized units are much less likely to be redeveloped. Some of the legacy stock sits on land zoned for more than what is currently built. We can pair upzonings along the lines of City of Yes targeted at the distressed stabilized stock, with an as-of-right pathway to add floors, infill development with potential teardowns, or rear additions to generate new market-rate units. These market-rate units would then become a cross-subsidy for rent-stabilized units. This would yield a rare housing win, which can add supply and preserve affordability at the same time. This would follow the playbook in NYCHA, where the Mamdani administration is aggressively pursuing developmental paths that add more market-rate housing on NYCHA campuses, with the funding used to address capital shortfalls on public housing in areas such as the RAD-PACT redevelopment at NYCHA’s Fulton Elliot Chelsea houses. The same basic formula can apply for rent-stabilized buildings, too.
The current pathway for demolition or substantial rehabilitation is severe, and is commonly viewed as a negative event to avoid, rather than a pathway to preservation. It typically requires a stringent set of requirements, pre-approved demolition plans, removing the entire building including the foundation and stipends to displaced tenants equaling six times the average rent of non-regulated vacant units. The process for getting a demolition approved through DHCR typically takes so long that some owners pay buyouts far exceeding these amounts.
One change that could make this process easier is to let owners temporarily relocate tenants during construction, with a guaranteed right to return at the same stabilized rent once the work is done. This is the same approach NYCHA uses when a development undergoes substantial redevelopment. The 57,000 vacant rent-stabilized units could help serve as an important flex space to host rent-stabilized tenants while their buildings are under renovation. An additional change necessary for this policy to work is to allow newly created units in what are now fully rent-stabilized buildings to become market-rate themselves. This is essential to generate additional revenue and cross-subsidy, but existing law requires that new units be pulled into stabilization.
Fix the property tax. This is a big one, and it’s essential. Many renters in rent-stabilized units face poor and worsening housing conditions, and rightfully question where their rent checks are going. The answer, in many cases, is to the government: property taxes are by far the largest component of building expenses, accounting for around 31% of rental payments. The Furman Center has done a great job at documenting the inherent inequities in the tax system for multifamily buildings, with rentals paying a far higher tax rate than single-family homes, and rent-stabilized units having the worst tax treatment of all. That’s truly regressive, given that renters have incomes half that of owners, on average.
A broader property tax system to fix these inequities would be wonderful — and would provide the genuine cost decrease to justify a rent freeze. But if a broader fix cannot be worked out, the Furman Center highlighted one issue in particular that needs to be addressed. The City’s Department of Finance applies standardized expense ratios. This means that rent-stabilized units nearing the doom loop actually have steadily rising property tax bills even as their true profits dwindle. This issue has crept up on the city as expense ratios have steadily risen. But the good news is that it can be fixed by the City on its own, without the broader discussions with Albany that have to take place for broader property tax reform. This could be done, as the Furman Center suggests, by the Department of Finance creating a distinct subcategory for 90% stabilized buildings and creating a specific expense cap for this segment, recognizing the higher genuine costs these owners face.
Create an as-of-right conversion to “affordable” status. Many of the issues at the heart of the distressed rent-stabilized stock stem from its peculiar status. Despite the fact that these units house low-income tenants at below-market rate, they receive none of the tax relief or rental support the City routinely extends to housing formally designated as “affordable.” A standing pathway to convert them could close this gap.
Article XI of the Private Housing Finance Law allows the City to trade a property tax exemption for a binding affordability commitment. This means that owners get a break in these expenses, but must pass this along to renters. Somewhat confusingly, “affordability” is distinct from stabilization. Rent stabilization only regulates the rate of increase in rents, but says nothing about the level that rents start at or about the characteristics of who lives in the unit. A stabilized rent can be $1,200 or $3,400, and be rented out to a household earning minimum wage or over six figures (30% of rent-stabilized residents currently fall in the six-figure category).
Affordability status instead regulates the level of rents as a fraction of the Area Median Income, is typically accompanied by income eligibility rules over who is allowed to move in, and is structured to allow access by housing voucher recipients also allows for access by voucher holder recipients, who bring excess income to owners on top of typical rents. In exchange, affordable buildings receive favorable property tax treatment. These buildings are therefore more financially viable for owners, while at the same time better targeted to needy renters.
The problem is that this process for becoming an affordable building runs through a discretionary, case-by-case approach that few owners have been able to navigate. A standardized as-of-right swap would change that. It would allow for distressed assets to convert themselves into permanently affordable, voucher-accessible housing. This could happen without requiring a costly third-party transfer agreement that commonly costs the City a multiple of the building’s value.
Rebuild J-51 as a preservation finance tool. A major toolkit for helping to finance capital improvements on buildings was the ability to raise rents when making Major Capital Improvements (covering building-wide systems like roofs or boilers) or Individual Apartment Improvements (covering in-unit upgrades like kitchens or baths). Both let landlords recover those costs by charging rents above the Rent Guidelines Board’s annual limits. The 2019 rent law change limited these tools substantially, stretching MCI recoupment, imposing a 2% annual cap, and making the increases temporary. IAIs were capped at $15,000 over 15 years, an amortized limit of $89 a month, across no more than three improvements. Subsequent amendments have slightly limited these limits, but the basic limits remain. These tools had a downside for tenants: Capital costs were passed to tenants as permanent rent changes. But removing their viability has left buildings without viable financing vehicles to pay for upkeep.
The right design here would offer generous tax abatement policies that lower existing property taxes in exchange for investments in building-system replacement, but without passing on increases as rents. This is how the J-51 program currently works, making it the right tool for the job. This provides targeted capital relief to landowners in exchange for a property tax abatement, which lowers costs for landowners, without rental increases.
Rent freezes for tenants. New York City already has two programs that freeze rents for tenants regardless of what happens to building-level rents: one, called SCRIE, freezes rents for low-income seniors, while DRIE freezes them for low-income tenants with disabilities — protecting the finances of vulnerable households while still allowing landlords to raise rents on households with the ability to pay. We should add a third component: a freeze for all low-income households in all stabilized units, regardless of age or disability status.
Exactly because rent stabilization has no inherent income targeting, a more targeted and means-tested rent freeze program would protect the most vulnerable tenants. This design would offer existing tenants the stability that rent freezes promise, without defunding buildings. By only freezing the incremental increase in rents, this program would also be much cheaper than open-ended housing vouchers.
Condition the guideline on building conditions. Finally, the rental adjustment process itself needs a change to address building conditions. The underlying issue with the current system is that rental adjustments are unconditional: A slumlord who allows the building to fall apart collects the same rental increases as a property owner who successfully upkeeps the building. This is important because we see neglect concentrating in the highly-stabilized, pre-1974 segment of the stock. The pre-1974, highly rent-stabilized segment has more building violations, an indication of worse building conditions. These buildings have more violations when the fraction of stabilized apartments is higher.
For many tenant advocates, the poor conditions in these buildings are a sign of owner greed. However, this building stock has lower violations the higher the fraction of market rate units. The reason is that the basic economics of maintenance rely on the difference between what a unit could fetch on the open market and what the owner is legally allowed to charge. Owners face large incentives in market-rate units for proper upkeep because failing to do so loses tenants and revenue. Quality and cash flows move together, so maintenance pays for itself. Rent stabilization breaks this link. Because the rent is fixed by the guidelines regardless of the unit’s condition, and because the below-market rents lock the tenants in place, stabilized tenants are captive. Even well-intentioned owners face a reality in this scenario that the cash flows to pay for upkeep are limited and tenants will not leave even if they fail to upkeep.
Adding market-rate units in the building is a partial discipline on owners. In a mixed building, some share of tenants do pay for quality and will leave if the boiler fails or the lobby crumbles — so the owner has both the revenue and the reason to keep the building up, and that upkeep spills over onto the regulated units sharing the same roof and pipes. However, this incentive by itself is insufficient, especially in the fully stabilized buildings.
For these units, it is critical to use regulatory tools to achieve the same incentives for building maintenance that prevail in the open market. The cleanest way to operationalize this is to tie eligibility for the rental guidelines increase to a reliable, already-existing distress signal: enrollment or eligibility for the city's Alternative Enforcement Program. AEP is HPD's enforcement tool for the worst-maintained buildings in the city. The city defines objective eligibility criteria based on the ratio of open hazardous (class "B") and immediately hazardous (class "C") code violations issued over the preceding five years, plus unpaid emergency-repair charges. A building that winds up in this poor condition would forfeit its guideline increase until it cures the conditions and is discharged. This shift would amount to a rent freeze for slumlords, and would build a maintenance incentive directly into rent stabilization: letting a building decay would now cost an owner real revenue, year after year, until the violations are fixed.
What’s at stake
The city’s rent stabilization system represents a unique legacy of affordable housing in a dense urban environment. It would be a tremendous housing failure to let this stock fall into deep disrepair and neglect, the consequences of which will be felt first and foremost by tenants themselves. At the same time, we must recognize that the political demand for a freeze exists because tenants in the legacy stock pay more and more every year for buildings that are getting worse because the system offers owners no revenue beyond rent increases from tenants. A rent freeze addresses tenant affordability in the short-run, but aggravates the long-term channel of viability.
The agenda outlined here addresses the underlying problem in rent-stabilized housing by fixing the cause: giving every distressed unit a new revenue source in the form of new market units, tax breaks, or vouchers to generate economic and social diversity across this stock. Doing so will not require repealing the state’s 2019 rent reforms, litigating the freeze or displacing a single existing tenant. The only question is whether the City can act now, while the distress is evident and there is still time to shore up building health, or whether we will have to wait for a rerun of the Bronx in the 1970s to learn the lesson a second time.
