Freezing rents for years turns cities into slums by destroying their housing stock. It leaves housing providers with too little money to maintain or renovate apartments, as their expenses rise with inflation, but their rent revenue doesn’t.
That’s what happened in Vietnam’s capital city, Hanoi. It became a disgusting slum due to a rent freeze. In 1989, Vietnam’s socialist leaders admitted that freezing rents had destroyed the housing stock of Vietnam’s capital city, which had been sturdy enough to survive years of American bombing in the Vietnam War. Vietnam’s foreign minister said, “The Americans couldn’t destroy Hanoi, but we have destroyed our city by very low rents. We realized it was stupid and that we must change policy.”
But New York City may soon adopt such a stupid, destructive policy, if socialist candidate Zohran Mamdani is elected mayor. It could turn most of New York City into a slum. Mamdani wants to freeze rent for years, and not allow rent to rise with inflation, even though that will bankrupt some landlords and leave others with insufficient funds to maintain or renovate their units. New York already has rent control, but it has allowed rent-control landlords to raise rents very slowly to partly cover inflation. Mamdani’s mainstream liberal competitor Andrew Cuomo has not endorsed the disastrous proposal of freezing rents for years, and supports leaving rent control largely as it is (with slight adjustments to facilitate more “apartment building repairs”).
Mamdani also wants government-run grocery stores, even though they have a track record of letting food rot, and not stocking enough of certain kinds of food. Mamdani is a card-carrying member of the Democratic Socialists of America (DSA).
It is not clear who will win the June 24 Democratic Primary for mayor of New York — Andrew Cuomo or Zohran Mamdani. Whoever wins the Democratic Primary will likely become mayor of New York, because two-thirds of New York City voters are registered Democrats.
Former New York Lieutenant Governor Betsy McCaughey says the multi-year rent freeze supported by Mamdani would be a disaster for the city:
Left-wing mayoral candidates are promising a multiyear rent freeze on the city’s nearly 1 million rent-regulated units. That’s more than half the rental apartments in Gotham. It’s a cynical political strategy: Pander to a block of single-issue voters almost too large to resist — and capture the mayoralty.
Actually implementing that freeze would turn the entire city into a slum, with dilapidated, abandoned buildings and thousands of occupants forced to live in squalor because their apartments are no longer maintained.
It could happen. In New York City, occupants of rent-stabilized apartments — about 1.7 million people living in about 980,000 units — outnumber residents of unregulated apartments. If these rent regulation beneficiaries are mobilized as single-issue voters, they can swing an election. Barely a million people voted in the 2021 mayoral primary…
Leftist candidates are not leaving it to chance. Zohran Mamdani, Brad Lander and Jessica Ramos commit to freezing rents if they’re elected….
New Yorkers need to know the brutal consequences of rent regulations and rent freezes before they fall for this demagoguery.
In New York City, the Rent Guidelines Board’s nine members — all mayoral appointees — set permissible rent hikes once a year. Succumbing to political pressure, the RGB generally sets hikes at about half the inflation rate, meaning building owners, facing rising property taxes and labor, energy and water costs, get shortchanged. Eventually, many let properties fall into disrepair, allow dilapidated units to sit vacant, or even abandon their buildings.
The Citizens Budget Commission’s housing expert Sean Campion testified to the RGB on May 22 that a significant share of buildings are heading into this maintenance “death spiral.”
That’s the damage already caused by rent regulation even before the threatened freeze. The city’s older housing stock is crumbling, and fewer units are available, causing a shortage.
Rent control is not a free lunch for city residents. It not only harms landlords, but also the banks that lend to them, and provide loans to city residents and businesses. Rent control was a key factor in the collapse of New York’s Signature Bank, which had to be bailed out at the cost of billions of dollars.
Rent control also cuts city property tax revenue, which can lead the city to raise tax rates. It reduces the value of housing stock, shrinking the property tax revenue that funds schools and local governments. “Researchers at the University of Southern California said rent control hurt property values in St. Paul, Minn. by $1.6 billion,” reported Market Watch.
In a 1992 poll, 93 percent of economists agreed that rent control reduces the quantity and quality of housing available.
New York City rent control already is limiting landlords to rent increases that are less than inflation, notes Reason Magazine:
Before 2019, landlords could remove their units from rent stabilization when monthly rents went above $2,800 and the current tenant moved out—a policy called “vacancy decontrol.” Landlords were also allowed to pass on the costs of building repairs to tenants and raise rents. In 2019, the New York Legislature amended the rent stabilization law to eliminate vacancy decontrol and limit the ability of landlords to pass on the costs of unit upgrades and building repairs to tenants.
That means, today, landlords are only able to raise rents by the amount set by the Rent Guidelines Board, which consistently only allows rent increases well below the costs of inflation.
“What [lawmakers] were doing is eliminating the only mechanism that was allowing these buildings to operate financially…,” says Jay Martin, executive director of the Community Housing Improvement Program (CHIP)…Martin says many buildings are no longer able to operate profitably or finance needed repairs. Either government subsidies or changes to the state’s rent stabilization law to entice private investment are needed to keep these buildings afloat. Some building owners are leasing out their entire buildings to non-profits. Some are talking about walking away from their buildings entirely.
After New York limited rent increases to pay for major capital improvements to 2 percent, landlords cut back on such improvements. A survey of rent-stabilized landlords found that when rent increases were curbed,
Three out of four reported cutting back on essential building-wide repairs, such as a roof or boiler replacement, since the rent law passed. Nearly 90 percent said they had forgone kitchen or bathroom renovations. Just over half decided against revamping their buildings’ security systems to include cameras or video intercoms or adding storage lockers for deliveries to thwart porch pirates. Efficiency upgrades have also been pushed to the back burner. Over 40 percent of respondents said they would not replace lighting with LED fixtures that use 90 percent less energy — a budget saver for tenants. A quarter said they opted against installing fuel computers, which better regulate heat and hot water systems and reduce a building’s energy consumption.
It seems unfair to limit rent increases to less than inflation, when tenants’ pay and pension benefits tend to rise along with inflation. Average wages have risen faster than inflation since 2014, going from $24.48 per hour in July 2014, to $35.61 in November 2024. That’s an increase of 45%, compared to inflation of about 33% since then. Even most tenants who are retired can pay more in response to inflation, because retirees get annual increases in their social security payments based on cost-of-living adjustments.
