Mamdani's rent freeze is more likely than ever. Now what?

"But with the election just weeks away and a Mamdani mayoralty looking more likely than ever, some rent-stabilized players have shifted their focus. If a rent freeze is a near certainty, they ask, what else can be done to mitigate growing distress in rent-stabilized portfolios? Policies that tamp down on landlords' expenses have the potential to ease distress and also win support from a tenant-focused administration."

"Rafael Cestero, CEO at Community Preservation Corp, said he has been watching distress grow in even the most conservative portfolios. The nonprofit lender has seen foreclosures in rent-stabilized buildings with little debt and fixed-rate mortgages increase eightfold in the past two years. Much of that is due to eye-popping expense increases, such as a 52 percent increase in insurance costs over five years."

"Policies to address that side of the equation could help, according to Cestero. A public property insurance option, such as what the federal government offers homeowners in flood-prone areas, could bring down prices. An as-of-right tax abatement for rent-stabilized buildings could also help property owners who pay city taxes. Policies like that could make a significant impact on curbing distress in rent-stabilized buildings, an issue some policy experts fear could slowly make buildings uninhabitable due to deferred maintenance."

Landlords and lenders are shifting strategy in response to a likely rent freeze under Zohran Mamdani by focusing on measures to reduce operating costs. Distress has risen even in conservative rent-stabilized portfolios, with foreclosures increasing eightfold in two years for buildings with little debt and fixed-rate mortgages. Dramatic cost drivers include a 52 percent jump in insurance over five years. Proposed remedies include a public property insurance option and as-of-right tax abatements for rent-stabilized buildings to lower expenses, curb deferred maintenance, and prevent buildings from becoming uninhabitable.

Read at therealdeal.com