This month Mayor Mamdani implemented a rent freeze for the next two years on rent stabilized apartments.
Memories are short. This has been tried before and it was a dismal failure. But this time will be different.
You see when property owners have expenses rising including city taxes, insurance, utilities, and rents are legislated to be flat, and you still need to comply with the city’s stringent building standards regulations, the math doesn’t add up. At a certain point, the owners of these buildings are being legislated into bankruptcy.
Most of the city’s 1M rent stabilized units are in the Bronx and Northern Manhattan. About 2M residents live in these apartments.
The last time this was tried an urban wasteland was the result. The South Bronx was littered with burned out buildings. Desperate building owners found that it was more desirable to collect an insurance settlement than to lose their building to foreclosure. I remember those days well. My family was from NY and there were daily news reports of another fire in the South Bronx which swallowed up a few more buildings.
Between 1970 and 1981, the Bronx lost roughly 100,000 housing units to abandonment and arson, approximately one out of every five units in the borough’s total housing stock.
In 1980 alone there were 8,312 arson fires in NYC.
When the rent is frozen, a black market opens up. We saw this in the past. Tenants in a rent stabilized property would choose to sublet their apartment for more than they were paying, but less than a market rate apartment. The large gap between the market rate and the rent stabilized units creates an incentive for this black market to emerge.
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