Rent Freeze Proposal Chills Cash-Starved Owners of Bronx Buildings

Democratic mayoral nominee Zohran Mamdani’s pledge is raising alarms as bankers refuse to finance regulated buildings where costs outstrip income.

This article originally apeared in The City.

By Greg David

The City

August 7, 2025

NEW YORK - Every month, Langsam Property Services collects dozens of rent checks from two buildings it manages in The Bronx. But that’s not enough to cover the mortgage and operating expenses. So every month, the buildings’ owner sends another check — for at least $30,000, just to meet the mortgage.

The owner of this Bronx building had to pay the bank $830,000 to buy out his mortgage after no other bank would refinance.

A promise to freeze rents on all rent-regulated apartments for the next four years helped Zohran Mamdani win the Democratic primary for mayor. But not all rent-regulated buildings are alike. 

Following years of limited deregulation, many buildings in high-rent neighborhoods contain a mix of units — some rent-regulated apartments and some market-rate units that can often fetch substantial monthly rents. 

But the kinds of buildings Engel and Shur are trying to keep functioning — where all or almost all of the apartments are rent regulated — face extreme financial distress. Rent increases failed to keep up with costs for most of the last decade, and changes to state law in 2019 made it virtually impossible to renovate vacant units and raise the rents, putting such landlords in a bind.

A four-year rent freeze could result in the kind of abandonment that happened in the 1970s, say landlords, nonprofit housing groups and experts who study housing in the city.

“I think a lot of people just think that these are private building owners, and they have to figure it out, and the tenants can’t afford to pay the rent anyway,” says Rafael Cestero, chief executive of the nonprofit Community Preservation Corporation, which finances affordable housing and also manages a large portfolio of loans to rent-regulated buildings made by the failed Signature Bank. 

“Because this building stock is largely older and has significant physical needs to begin with, starving them of resources to make those repairs is only going to send them into deep physical distress.”

The 2023 Housing and Vacancy Survey, the most recent commissioned from the U.S. Census Bureau by the city’s housing agency, shows that 24% of rent stabilized apartments have three or more problems, such as rodent infestations, leaks or broken heating, compared with 10% of market rate apartments.

Cestero warns the consequences could be a return to the decades where landlords simply abandoned their buildings, some of which wound up being torched for insurance. “Those of us that are old enough to remember what this housing looked like in the 70s and 80s, don’t want to go back there and that is where we are headed,” he added.

At issue are buildings built before 1974 where at least 75% of the units are regulated. A conservative estimate puts the number of units in such buildings at 400,000, out of approximately 1 million rent-regulated apartments. The problem is most acute for 200,000 units where the average monthly rent is below $1,200 or too low to cover the costs, according to an analysis by the Furman Center released this spring. In addition, an estimated 300,000 government subsidized, affordable units are in a similar predicament because regulatory agreements similarly cap rent increases.

Furman studied those types of buildings in The Bronx and found that their costs exceeded their rents every year since 2020 and that last year, the annual average shortfall reached $1,444 per unit — more than the average monthly rent.

“The Bronx has the highest proportion of these buildings and the rents are not high enough to cover expenses, but buildings like this exist throughout the city,” said Mark Willis, who conducted the analysis.

Signs of trouble are also clear at the Community Preservation Corporation as well. Delinquent loans in its own portfolio have soared to 9% from 3.7% in 2023, and 16 loans are facing enforcement action for failure to be current on mortgage payments.

The numbers are dire for the Signature loans CPC is supervising. Signature specialized in making rent regulated loans to landlords who intended to renovate apartments and raise rents. When the 2019 law made that strategy impossible by sharply limiting rent increases, the finances of those buildings cratered.

CPC says that of the approximately 850 loans it is overseeing in New York City, one quarter in payment default, 69% have other red flags of payment distress up from 54% in February 2024 and 34% are in some sort of physical distress, up 3 percentage points from February 2024.

“While 16 may not sound like a big number, it’s a dramatic increase from where it historically has been in the CPC portfolio,” said Cestero.

Landlords say they simply can’t afford to spend to improve older buildings because they can’t recover their investment.

From 2012 to 2017, Engel of Langsam Property Services put in more that 60 new boilers as he converted the heat systems to natural gas and in 2020 he replaced some 50 roofs, adding solar energy installations.

When a unit became vacant he would renovate the kitchens and the bathroom and under the pre-2019 rules out be able to raise the rent to recover the outlay. If a unit had rented for $700 he might be able to raise the rent to $1,400 to recoup the investment.

Now he regrets doing the new roofs and solar projects in 2020. And since the 2019 changes, he hasn’t done a single major investment nor renovated a unit.

When units that have been occupied for a long time become available, they often need extensive renovation, and many are simply left vacant because landlords say they can’t afford to make them rentable. 

While the total number of such units remains a matter of dispute, Langsam says it has about 50 such units. Shur has about 8 vacant at the moment out of 800, but others that he will not re-rent if the tenant leaves.

Rent increases over the past decade have been less than half the increase in New York area inflation, a period that includes the three years when then-mayor Bill de Blasio successfully pressured the Rent Guidelines Board to approve no increase. Rents in the last 10 years have increased slightly less than 12%. The New York area Consumer Price Index jumped more than twice that at 27%.

Many costs faced by landlords have increased more than that, especially for insurance. The insurance challenge has been especially severe in the Bronx, where only about three companies are willing to provide coverage.

Three years ago, insurance for the 150-unit building at 2028 Creston Ave. managed by Langsam cost $200,000 a year. Last year, it was $600,000.

Tenant advocates say that despite the problems of some owners, the finances of rent-stablilized landlords overall are improving.

The annual income and expense study the Rent Guidelines Board released in March showed that net operating income — a measure or profitability that excludes mortgage payments — increased 12.1% from 2022 to 2023. Rental income increased 6.9% and the number of buildings that lost money according to its definition of NOI declined for the first time since 2016, to 9.3%.

NOI in what the RGB calls core Manhattan soared by 23.1%. In the Bronx it inched out a 0.8% increase.

Tenement buildings in The Bronx housed rent stabilized units, Aug. 5, 2025.

The Furman analysis and the CPC numbers do not sway tenant advocates.

“Our analysis shows NOI increases in a majority of community districts in the city,” said Oksana Mironova, senior policy analyst at the Community Service Society. “If the rents go up, tenants are just going to get evicted.”

Many owners of rent regulated buildings are selling by accepting steep losses. An affiliate of the Related Companies, owners of Hudson Yards and a major residential landlord, in May sold 2,000 units spread across five neighborhoods in the northern Bronx for $192.5 million, or 24% less than it paid in 2014, and that was after spending $30 million on renovations. Related continues to shrink its rent-regulated portfolio.

Schur and the owners of buildings Langsam manages are faring worse.

“I don’t think we manage a single building that we could sell now where we would walk away with enough money to pay the taxes that would come due, because many of the buildings were purchased decades ago,” said Engel.

Real estate publications like The Real Deal and Crain’s New York Business are reporting discounted sales of rent regulated buildings at steep discounts every week. But in almost all cases, the buyers are unwilling to discuss their business strategies.

Some may be betting that the state legislature will agree to changes that will allow them to raise rents. Engel and Shur think that many are inexperienced and underestimate the challenges they face. Willis worries that they are the kind of owners who may be motivated by the possibility of making money as long as they can, even while the buildings continue to deteriorate. 

Cestero notes that CPC won’t finance any loans on older, fully rent-regulated buildings because it doesn’t see how they can be successful.

No Easy Fix

Solutions will not be easy, especially since the state legislature has been reluctant to revise its 2019 rent law, which in most cases limits the cost of improvements that can be passed on to a tenant to $30,000 per apartment, or $178.57 per month.

“The RGB has an impossible task which is to meet the dual mandate of maintaining affordability and maintaining the viability of these properties,” said Willis. “Any effort to compromise between the two still leaves the problem of what do you do with the tenants who can’t pay anymore rent and what do you do with landlords who need more income to be able to properly maintain their properties?”

The New York Apartment Association, a landlord group, continues to lobby for major changes to the 2019 in order to allow owners larger rent increases in return for renovations of apartments and capital investment. The legislature has shown little interest in such proposals, and the odds of it acting in 2026, an election year, seem long. 

Cestero has called for mayoral candidates to come up with a comprehensive program to solve the problem but at the top of his list is a system that depoliticizes rent increases by requiring a formula that links them to the consumer price index.

Tenant advocates say the best step would be a major expansion of the city’s rent voucher program, but that they oppose any effort to solve the problem through significant increases in rents.

“There are buildings that are distressed and buildings that are doing well,” said Ellen Davidson, an attorney at the Legal Aid Society who specializes in housing. “But I would oppose any effort to double or triple the rent which would just lead to tenants losing their homes are probably becoming homeless.”

Expanded voucher programs that would allow tenants to pay would help, say landlords like Schur and Landsam.

Mamdani did not respond to a request for comment on the plight of these buildings and his rent freeze pledge. 

But the NYAA insists that a premeditated housing freeze is simply illegal because the Rent Guidelines Board is obligated to consider the financial condition of the owners. 

And NYAA president Kenny Burgos has a warning for him: “Mamdani ran a very disciplined campaign on affordability and what he is going to find is that his plan for affordability will lead to insolvency. I don’t think he recognizes the housing crisis he is falling into.”