Seven years after the passage of the Housing Stability and Tenant Protection Act of 2019 (HSTPA), its negative consequences continue to be deeply felt across New York’s housing market.

HSTPA left owners of rent stabilized buildings with only one tool to pay for rising expenses, rent increases voted on by New York City’s Rent Guidelines Board. The RGB is currently considering a 0%-2% rent increase for one year leases in 1 million rent stabilized apartments, around half the City’s housing stock. A final vote is scheduled for June 25.

The failure to approve a rent increase to catch up with inflation will mean stabilized buildings will continue to lose ground. However, even an increase at a higher level won’t reverse the financial and physical damage HSTPA has already inflicted on the City’s rent stabilized housing supply.

How Did We Get Here?

HSTPA, which took effect in June of 2019, eliminated the ability to increase rents in rent stabilized units even when a vacancy occurs. Landlords have responded by leaving units vacant and postponing renovations, particularly when the regulated rent is extremely low.

Macro trends have also contributed to the plight of rent stabilized housing. After HSTPA was approved, landlords were hit with COVID, which affected collections, especially in the Bronx. Tenants were told by advocates that they could defer payments, resulting in “economic vacancy” or nonpayment that continues to be above 15% in some cases today. Lastly, inflation soared and interest rates doubled in 2022 and have stayed elevated since then.

Throughout all of these shocks, the RGB voted to increase rents well below the growth in the expenses. Data from Ariel Property Advisors’ Q1 Multifamily Report shows that over the past five years, a 16% increase in rent growth has been dwarfed by a 40% surge in operating expenses.

Data from Ariel Property Advisors' Q1 2026 Multifamily Report shows that over the past five years, a 16% increase in rent growth has been dwarfed by a 40% surge in operating expenses.

For 100% stabilized buildings outside of core Manhattan, the average monthly rent was $1,287 in 2024, while operating costs sat at $1,022, according to the RGB 2026 Income and Expense Study. That leaves a razor-thin margin to cover mortgage debt service, emergency repairs, and major capital upgrades, a financial gap further exacerbated by the lingering post-pandemic tenant nonpayment rates.

This math is unsustainable. A recent New York Apartment Association (NYAA) analysis warns that Mayor Mamdani’s proposed four-year rent freeze will push roughly half of the city’s rent-stabilized buildings into systemic bankruptcy, unless the government can offset operating cost increases.

What can be done? “Vacancy Reset” Would Reverse the Unintended Damage of HSTPA

NYAA’s CEO, Kenny Burgos, who was a recent guest on my Coffee & Cap Rates podcast, observed that HSTPA was sold as a sweeping tenant protection law, but in fact it targeted the financing and economics of the buildings.

One of the most damaging features of the legislation Burgos agreed was the introduction of vacancy control, restricting the amount a landlord can charge when a unit is vacated even by a longtime tenant who lived in the unit for 20 to 30 years.

For example, if the tenant who left paid $1,000 a month, it’s assumed the rent will stay the same for a new tenant, he said. If a landlord renovates the unit to bring it up to code, they can only charge a new tenant an additional $347.22 maximum, which isn’t enough to cover the operating costs of the unit much less the renovations.

The result is that in the middle of a housing crisis, at least 50,000 rent stabilized apartments aren’t being rented and have been removed from the market, Burgos said, adding that the number is expected to rise, No other rent control system in the country, even in California which has similar politics to New York City, has vacancy control because it’s so devastating to the housing stock, he noted.

A vacancy reset would give owners an incentive to renovate vacant units and bring them back online. The new tenant would agree to a new first rent and thereafter receive all the protections of rent stabilization, a policy Burgos calls a “rare win, win.”

“A vacancy reset wouldn’t increase rent on any single in-place tenant today,” Burgos said. “It wouldn’t cost the city or state government a dollar and it would bring housing supply on the market, which would relieve pressure on free market rents.”

Plunging Property Values Hurt Tenants Most

On average, values for rent stabilized properties have fallen by 50% since HSTPA took effect, lower than many mortgages. In the Bronx, the average value fell to $78,849/unit in Q1 2026, although many are selling below that level, pricing New York City hasn’t seen in 20 years, according to Ariel’s research.

On average, values for rent stabilized properties have fallen by 50% since HSTPA took effect, lower than many mortgages.

Therefore, owners can’t borrow to pay for capital improvements or refinance their way out of a mounting solvency crisis. Many tenant advocates may cheer the loss in value, but they shouldn’t because that translates to a bad tenant experience and higher violations.

“If your building is valueless, then it is valueless to a bank as well,” Burgos said. “And if it’s valueless to a bank or lender, how do you invest in buildings that many times are 100 years old.”

NYAA estimates that more than 200,000 apartments in 5,000 buildings, the majority in the Bronx or Northern Manhattan, are already in severe financial distress with operating and maintenance costs exceeding gross income.

Owners of financially troubled rent stabilized buildings have very few options, Burgos said. They must pay their property taxes, which averaged over 30% of all costs for pre-1974 buildings with 100+ units in 2024, pay insurance (7.6%), utilities (8.5%), fuel (5.6%), and labor (15.4%), according to RGB data. Unfortunately, maintenance and repairs suffer.

More distressed rent stabilized buildings have entered the Alternative Enforcement Program (AEP) program in recent years.

How to Look at the Numbers? Newer, Subsidized Buildings Mask Negative NOI in NYC's Older Housing Stock

Pre-1974 stabilized housing is in a class of its own. Burgos argues that the RGB’s methodology doesn’t work in a post-HSTPA environment. Instead, the agency should separate NOI metrics for pre-1974 and post-1973 rent stabilized housing because combining the two distorts the reporting.

He explained that pre-1974 stabilized housing, which make up 80% of the 1 million rent stabilized units, are caught in an involuntary system with units stabilized in perpetuity, no income restrictions, or public subsidies.

In contrast, in post-1973 rent stabilized housing, developers entered into agreements voluntarily through the 421a or 485x tax abatement programs in exchange for setting aside 20% to 25% of the apartments as income-restricted rent stabilized units. In the newer buildings, market rate units subsidize the rent stabilized units, allowing landlords to cover their rising expenses.

However, the headline news from the RGB’s 2026 Income and Expense Study, highlighted that Net Operating Income (NOI) for rent stabilized units was 6.2% between 2023 and 2024, leading policymakers to argue the buildings were financially healthy, which isn’t the case, Burgos said.

Upon further reading, the report shows in the Bronx and Queens, pre-1974 buildings with over 100 units showed negative NOI of -7.7% and -1.0%, respectively. Also, after adjusting for inflation, NOI excluding Core Manhattan, only rose by 0.9%.

Burgos said the private owners of pre-1974 stabilized housing stock are forced to subsidize their tenants’ rents without the government assistance available to Affordable Housing providers. But converting rent stabilized buildings into government subsidized Affordable Housing would be impractical because the city and state don’t have the cash or capability to do that, which is why it’s imperative that the government work with the private sector, Burgos said. He noted that the government can’t even pay for the $78 billion in outstanding capital needs for the 177,000 units of city-run NYCHA housing.

COPA Fails to Address the Underlying Insolvency Threatening NYC’s Housing

Some politicians believe the solution is to pass the Community Opportunity to Purchase Act (COPA), which would mandate offering distressed properties for sale first to designated nonprofits before allowing the private sector to bid on them. Former Mayor Eric Adams last year vetoed an earlier version of COPA. Mayor Mamdani supports the legislation.

But COPA doesn’t make sense because nonprofits and Affordable Housing providers are suffering too and their distressed buildings are at risk, according to a report by the New York Housing Conference. Of the 1 million rent stabilized apartments, over 210,000 units are publicly subsidized, income restricted by a regulatory agreement with a city or state housing agency and subject to annual increases set by the RGB. Typically exempt from property taxes, Affordable Housing assumes a 5% vacancy allowance, 2% annual increases in rent and 3% annual increases in costs.

“However, over the last decade Affordable Housing has experienced RGB increases below 2% on average and since the pandemic, rent collection has been lower than expected,” the NYHC report found. “Over the same period, expenses have been increasing, jeopardizing the financial stability of many Affordable Housing buildings. When operating costs and debt service exceeds rental income, building owners don’t have the necessary funds to make repairs but even more consequential is that financial instability threatens the financing making these buildings affordable, putting their tenants at risk.”

Housing Market at a Breaking Point

The compounding crises facing New York City’s rent-stabilized housing stock point to a fundamental disconnect between current policy and economic reality.

As Burgos emphasized, the well-intentioned tenant protections of the HSTPA have inadvertently choked off the capital necessary to maintain aging infrastructure and contributed to driving property values to 20-year lows.

Meanwhile, the RGB’s aggregated data masks a severe solvency crisis in older buildings and proposed legislative fixes like COPA overlook the fact that nonprofit Affordable Housing providers are already facing the exact same financial strain.

Without targeted policy adjustments such as a vacancy reset, New York City risks further depleting its already scarce housing supply, leaving both building owners and the tenants they house in a state of chronic instability.

Kenny Burgos, CEO of the New York Apartment Association, was a recent guest on the Coffee & Cap Rates podcast, discussing the long-term impact of HSTPA. View the full video here.

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