The New York real estate community choked on their spreadsheets when mayoral candidate Zohran Mamdani proposed rent freezes on all rent-stabilized apartments. While his words were primarily aimed at the powerful Wall Street REITs and large-scale landlords that own thousands of New York City apartment buildings, the policy could be most severely affected by the many mom-and-pop landlords who don’t have the resources to weather the consequences of stalled rents amid increasing expenses. Should Mamdani win the November election based on his tenant-friendly policies, it could have wider ramifications in other U.S. cities.
A City of Renters
Mamdani’s rent freeze stance resonated strongly with his voting base, as 39% of all New York City households were cost-burdened in 2024—meaning they spent 30% of their income on housing—according to the Office of the New York State Comptroller. The numbers are even higher for renters, with 43% of people who lack the luxury of a stable housing payment being cost-burdened.
Unaffordable living accommodation is one of the greatest sources of housing insecurity and the cause of both physical and mental illness amongst those who live under those conditions. Considering that approximately 69% of households in New York City rent, Mamdani’s stance is widely popular amongst much of the city.
Building Owners of Six Units or More Could Be Subject to a Rent Freeze
Buildings of six units or more are eligible to be rent stabilized, which comprises many buildings in the city that smaller landlords own.
Paul Rahimian, CEO and founder of Parkview Financial, a commercial real estate lender, echoed the sentiments of many property owners in the city regarding a potential Mamdani victory. “The mayoral primary was the nail in the coffin. It would be the kiss of death if he won,” he told the Wall Street Journal.
“Comparative and Alternative Hardship” Exemption
However, Mamdani’s campaign contends he is not unsympathetic to the plight of landlords.
“Zohran is committed to protecting the livelihoods of small landlords and maintaining a stable, functioning property market,” Dora Pekec, a Mamdani campaign spokeswoman, told the Wall Street Journal. Mamdani advocates a “comparative and alternative hardship” exemption for landlords who can justify the need for rent increases, allowing officials to examine their business finances.
Building Expenses Could Spiral Out of Control
Mamdani’s primary win and the prospect of a mayoral win have unsettled financial markets, with New York-based banks and REITs falling around 5% in the stock market back in June, according to Reuters. One of the biggest fears among the real estate community is being unable to adjust rents to cover increasing financial obligations. The result could be landlords failing to make repairs, exacerbated by code violations from the city, and ultimately a decrease in rent-stabilized, affordable buildings in New York City—counterproductive to Mamdani’s goals.
“You have people running around saying, ‘No increases, no increases,’ while everything is going up around you,” current mayor Eric Adams said at a recent town hall.
Boston Aims for the Middle Ground
New York is not the only big city with crippling housing issues. Boston residents are largely cost-burdened. However, rather than freeze rents entirely, the city has attempted to forge a middle ground that limits rent hikes.
In early 2023, Mayor Michelle Wu filed a plan that capped rent increases for existing tenants at either 10% in high-inflation years or the Consumer Price Index (CPI) for the Boston area, plus six percentage points, whichever was lower, as reported by WBUR.
The plan proposed exemptions, including owner-occupied buildings with six or fewer units, and for newer buildings within the first 15 years of receiving their certificate of occupancy, it was widely reported. Wu’s policy advanced with broad support in March 2023 and covered around 55% of Boston’s rental units, amounting to 185,000 dwellings.
Other Cities and States Considering Enacting Strong Rent Regulation Measures
While no other American cities have proposed an actual rent freeze, many have supported heightened rent regulation. Here’s a look at some of the initiatives being considered.
Seattle, Washington
Washington State recently emulated Boston’s proposal by passing HB 1217, a law that restricts rent increases for current tenants. The cap is 7% plus inflation or 10%, or whichever is lower. For manufactured home occupiers, the cap is lower—5% per year.
There are some notable exemptions: new construction (exempt for 12 years) and affordable housing (run by nonprofits and housing authorities). However, rents for new tenants may be set freely, and landlords must give 90 days minimum written notice before raising rents.
Jay Parsons, an independent consultant and former chief economist at Richardson, Texas-based RealPage, told multifamilydive.com:
“We’ve seen this elsewhere in places like New York, [where] they’ve expanded or revised the rent control rules…four different times. So I think that the precedent is going to likely lead some developers and investors to maybe not consider the state of Washington. Not everybody’s going to do that, but I think there’ll be others who’ll say, ‘We don’t want to mess with it.’ It definitely adds a lot of risks to future investments.”
Minneapolis, Philadelphia, San Francisco, and Berkeley, California
These are among the cities that have banned algorithmic rental price-fixing software, with Portland, Oregon; Providence, Rhode Island; and San Diego also exploring similar laws.
“This wave of action shows that local governments are stepping up where federal enforcement takes time,” Ivan Luevanos-Elms, executive director of Local Progress, the national network helping coordinate the efforts, told Stateline.org.
Final Thoughts
Although large, expensive cities continue to drive economic growth in the U.S., they may not be the most sensible choice for real estate investors without deep pockets. While REITs and corporations have the luxury of riding out short-term volatility, many small investors who own six units or more are struggling. The lesson is simple: If you want to invest in cities with rigid rent regulation, stay in the one-to-four-family range.
For larger investors, if rent regulation becomes too prohibitive, the outcome seems clear: They will simply stop investing there and choose to put their money elsewhere. Unfortunately, many city lawmakers lack understanding of the complexities of being a landlord and often paint everyone with a “greedy landlord” brush. However, when repairs, taxes, insurance, and code updates cannot be easily kept up with, landlords have the choice to decide that it’s simply not worth the hassle, which hurts everyone, but mostly tenants who need a place to live.
As recent examples have shown—most notably in New Rochelle, New York—the answer to rental growth is not to punish landlords, but to build more housing, not just luxury condos, but quality housing for the middle class. New York City has steadily increased its housing supply, but it still lags behind the national average. If cities wish to tackle rental prices, working with developers and landlords rather than against them is key to success.