(The Center Square) — New York City’s rent-stabilized housing sector needs a multi-billion-dollar bailout from incoming Mayor Zohran Mamdani to prevent a tsunami of mortgage defaults, according to real estate groups.
The New York Apartment Association estimates that rent-stabilized buildings in New York City need a $4.65 billion infusion. That includes $1 billion previously requested by the New York Housing Conference, plus an additional $3.65 billion for the majority of rent-stabilized, pre-1974 buildings that are privately owned and pay $1.6 billion annually in property taxes.
“The severe fiscal distress in rent-stabilized housing is now clear to everyone. Privately-owned, majority rent-stabilized buildings are operating with less revenue than nonprofits that are requesting a billion dollar bailout,” Kenny Burgos, CEO of the New York Apartment Association, said in a statement.
“The data clearly shows that if you are going to bail out them, you are going to need to do the same for privately-owned buildings,” he said.
Burgos said the estimated price tag for the bailout shows that “the math doesn’t work for rent-stabilized housing anymore” and suggested that the infusion of new funding, if approved, would only stabilize the building for the next five years.
“We will be back here again needing another bailout if we want to prevent the loss of this housing stock to defaults, foreclosures, and massive abandonment and disinvestment,” he said.
A report released two weeks ago by the New York Housing Conference warned that affordable housing landlords in New York City need at least $1 billion from the new mayor to avoid widespread defaults. Thousands of the city’s roughly 213,000 subsidized, rent-stabilized units are losing money in the wake of COVID-19 pandemic-related losses and utility increases, according to the report.
The group said Mamdani’s plans to freeze rent will help these tenants “will exacerbate financial difficulties for distressed affordable housing while undermining the city’s own affordable housing financing assumptions of 2% rent growth. The group recommended that the rent freeze be paired with a $1 billion investment for rent-stabilized buildings.
A Mamdani spokeswoman said the mayor-elect “knows tenants across our city deserve relief and that the city can support distressed landlords without placing that burden on those same tenants.”
“He knows we need to keep the more than 2 million rent-stabilized New York tenants in this city while helping landlords manage rising insurance costs, water bills, Con Edison rate hikes, and a broken property tax system,” Mamdani spokeswoman Dora Pekec said in a statement.
New York City’s rent stabilization law, first enacted in 1969, restricts annual rent increases for specific apartments, with any increases set annually by a nine-member board appointed by the mayor. It affects roughly 1 million apartments in the city and has survived dozens of legal challenges over the past several decades.
Critics have described the rent control system as “welfare for the rich” and said that New York City is losing millions of dollars a year in potential revenue from the costly housing regulatory system.
Supporters of the rent control law say it’s a crucial safety-net in a city with some of the highest rents in the nation and a lack of affordable housing that is contributing to people leaving the state.
Last year, Democratic Mayor Eric Adams signed legislation extending the city’s rent stabilization law by another three years following an unsuccessful Supreme Court challenge by New York City landlords.
