Commentary
Of the approximated 2.3 million apartments in New York City, almost a million of them are rent-stabilized. Unlike rent control, under which rent prices are fixed, rent stabilization allows increases at a regulated rate. The politicians behind these price controls aim to make housing costs “fairer” for tenants at the expense of landlords. But the unintended result of these policies, as seen in the 1970s, is that landlords will even abandon properties because the costs outweigh the benefits, with whole neighborhoods suffering as a result. Unfortunately, elected officials and their voters often forget these historical lessons. In 2019, New York City expanded rent stabilization. Now, as we repeat past mistakes, we are also repeating the consequences.
Housing Stability and Tenant Protection Act
From a renter’s perspective, a rent-stabilized apartment means lower housing costs than what would occur in the free market. From a landlord’s perspective, owning these units was never the best investment, but there were ways to work around the disadvantages. Before 2019, landlords could get their apartment delisted from rent stabilization by performing gut renovations removing almost everything except the exterior walls. This was very expensive, but it offered a way out.That changed with the Housing Stability and Tenant Protection Act of 2019. This law permanently stabilized apartments, meaning that annual rent increases are to be kept below market rates. It also eliminated the policy of preferential rates, which had allowed landlords to offer discounted rates upon renewal. Now if a landlord offers a lower rent to fill a vacancy, he must continue offering that rate every year.
Another way for landlords to increase their revenues was through a legal rent increase of up to 20 percent for new tenants after the old ones moved out. But the 2019 law eliminated that option, too—landlords can only charge the same rent the previous tenants would have paid if they had stayed.
The 2019 law also makes it more difficult to evict tenants. A landlord’s business depends on cash flow, and eviction is seen only as a last resort. Tenants are ejected when they cause disturbances or they stop paying rent. But courts can now stall the process for a year. The law also dismantled the Tenant Blacklist, making it harder to vet potential tenants.
Unintended Results
In 2022, 176 rent-stabilized apartment units in New York City were foreclosed on, and that number has doubled every year. As of April 2025, more than 2,000 units are in danger of defaulting on their mortgages. As in the 1970s, many owners face operating costs that outweigh their revenues. The Rent Guidelines Board estimates that 10 percent of rent-stabilized units lose money for their landlords.If an owner sells his building, the new owner must keep the stabilized units at the same regulated rent. That makes these buildings unattractive investments, guaranteed to keep bleeding cash. Should the properties go into foreclosure and the banks be unable to find new buyers, tenants could ultimately be evicted. This huge win for tenants at the expense of landlords turns out to be a lose-lose situation for everyone.
What Happens Next
Property owners are limited: They can’t increase revenues to cover costs, and they can’t remove tenants who won’t pay rent. Even for a profitable building, one or two tenants not paying their rent can change the operating numbers into a loss. Every month spent fighting to get them out is another month without rent.
During the 1970s, building owners ignored basic maintenance because they could not afford it. Property taxes stopped being paid, buildings were abandoned, and entire neighborhoods declined. Some owners even torched their buildings because insurance payouts were the only value that could be extracted.
As the negative results continue to accumulate, there will hopefully be people with the wisdom to reverse these policies before bad becomes worse. But one of the front-runners to be the city’s next mayor is the same former governor who signed the Housing Stability and Tenant Protection Act into law.
From the Foundation for Economic Education
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.