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“If New York City truly values affordable housing, it must also value the economic sustainability of the buildings and small owners providing that housing.”
New Yorkers, like Americans across the country, are struggling with affordability. As small property owners, we understand this reality better than most, not only because we live and work in the same neighborhoods as the families we house, but also face the economic pressures of maintaining our buildings.
At this time every year, the fate of small rent-stabilized building owners is in the hands of the New York City Rent Guidelines Board. The nine-member body, the majority of which has been appointed by Mayor Zohran Mamdani, is holding its annual series of public hearings before its final vote on June 25 on rent adjustments for one- and two-year leases of rent-stabilized apartments.
The RGB is supposed to keep politics out of the process, and base its decision on the health and stability of rent-stabilized property while equally taking into account the impact on tenants and owners. But how can we feel like the process is fair toward small owners when Mr. Mamdani is calling for the rent freeze he promised during his mayoral campaign?
Year after year, the RGB’s own data and analysis shows that the cost to operate rent-stabilized housing increases dramatically. Independent economists and housing policy-makers with no horse in the race have warned the RGB of the consequences of continually underfunding rent adjustments. More rent-stabilized properties will experience financial distress and face foreclosure and abandonment, which will strip the market of affordable units and remove revenue from the city’s property tax rolls.
The claim that “landlord profits” are rising ignores the realities of the city’s pre-1974 rent-stabilized housing stock. These are not luxury towers backed by institutional investors, or majority market-rent buildings with one or two rent-stabilized apartments. They are overwhelmingly older buildings owned by small operators, many of them generational and immigrant families like ours, who are struggling to maintain quality, safe housing.
Want another perspective? Opinion: The Economic Case for a Rent Freeze
The RGB can no longer ignore the fact that older rent-stabilized housing is becoming economically unsustainable. It’s not because small owners are incapable; we are put in this position because of onerous government regulations and an impossible financial structure that caps or freezes rents, but not our insurance premiums, property taxes, utility bills, repairs, and other operation costs and expenses.
Our property taxes alone eat up over 40 percent of our rent rolls. Our water and sewer, insurance, utility, heating, labor, repair, and government compliance costs increase every year. The RGB’s own data and analysis consistently documents major increases in the operating costs of rent-stabilized apartments.
The rent freeze proponents say landlords are reaping big profits. Not us, not small owners. The RGB’s net operating income data is distorted because small properties are mixed with buildings in high-wealth Manhattan zip codes, new construction, majority free-market-rent buildings, and those with only one or two rent-stabilized apartments.
Of course, that housing ecosystem is going to be more profitable. But it doesn’t show the true picture of small owners. We don’t have access to the subsidies, tax credits, grants, and public financing mechanisms available to nonprofit housing providers, publicly financed developments, and private developers.
For us and thousands of other small owners of aging rent-stabilized housing, especially in outer-borough working-class neighborhoods, the financial realities are constant repairs and upgrades of major systems, deferred maintenance, dried up rainy-day reserves, higher interest rates on debt, inability to finance repairs, rent arrears (and a dysfunctional Housing Court system that’s supposed to help owners and tenants), regulatory restrictions, and underfunded rent adjustments.
Advocates calling for another rent freeze (we’ve had three during the past decade under the Bill de Blasio Administration) continue to erroneously frame housing providers as if all of us are speculative investors waiting to strike it rich. For the majority of small owners, our buildings are our homes. We live there with our families and are neighbors to our renters. Rental income supports building operations, payroll, repairs and, yes, retirement savings and family livelihoods. Our buildings are our small businesses.
When rents fail to keep pace with expenses, the results are deteriorating buildings, delayed repairs, reduced services for the families we house, fewer resources available for long-term preservation, and inability to provide for our own families.
If New York City truly values affordable housing, it must also value the economic sustainability of the buildings and small owners providing that housing. Pre-1974 rent-stabilized buildings house millions of New Yorkers and represent the backbone of the city’s affordable housing infrastructure. Starving these buildings of revenue through repeatedly inadequate RGB adjustments threatens the long-term stability of the housing stock itself.
The choice shouldn’t be between tenants and owners. The real choice is whether the Mayor and his administration will confront the actual financial condition of rent-stabilized housing in an honest and practical way, or force his influence on the RGB that will cause the board to continue ignoring the data and push more small buildings into physical and financial distress.
We support fair and reasonable rent increases that reflect the increases in operating costs documented by the RGB, so that all small rent-stabilized property owners have the financial wherewithal to preserve housing quality for the long term. Ignoring the RGB’s own data and forcing a rent freeze is not housing policy. It is politics that puts the future of the city’s affordable housing stock at risk.
The authors are members of Small Property Owners of New York (SPONY). Gojcaj manages her family’s small buildings in the Bronx. Tsevdos is the owner of a 16-unit building in Brooklyn.