Rent Guidelines Board
The Downfall of Rent-Stabilized Housing
For the past five years the majority of rent-stabilized buildings have been systemically defunded by the government, forcing buildings to defer maintenance and upgrades, plunging many into foreclosure, and putting the future of this housing stock at severe risk.
Understanding the Rent Guidelines Board (RGB) Process and the Challenges for Building Owners in NYC
"Given the importance of the rent-stabilized stock not just to current, but also future generations, the RGB needs to keep the long-term economic viability of this housing clearly in focus.” – NYU’s Furman Center
Rent-stabilized housing is a cornerstone of New York City’s affordable housing stock, providing homes for millions of residents. However, the financial viability of these buildings is under significant strain due to rising operating costs, outdated rent adjustments, and increasing regulatory burdens. Thousands of buildings providing housing to hundreds of thousands of New Yorkers are losing money, many of them are bankrupt, and foreclosures have dramatically increased. The trend for Pre-1974 buildings outside the core of Manhattan, most of which are more than 80% stabilized, is toward insolvency and building deterioration.
What is the Rent Guidelines Board (RGB)?
The Rent Guidelines Board (RGB) is a New York City agency responsible for setting annual rent adjustments for rent-stabilized apartments. Each year, the 9-member RGB reviews data on operating costs, inflation, and other economic factors to determine allowable rent increases for one- and two-year leases. The goal is to balance the needs of tenants with the financial realities of maintaining aging buildings.
However, in recent years, the RGB has consistently approved rent adjustments that fall below the actual rise in operating costs, leading to a growing financial crisis for many rent-stabilized buildings.
The Challenges Facing Rent-Stabilized Buildings
Operating costs for rent-stabilized buildings have skyrocketed in recent years. Key expenses include:
Property taxes have increased significantly, accounting for nearly 30% of operating costs.
Insurance Insurance costs have nearly tripled over the past decade.
Utility costs have risen sharply, with fuel costs increasing in the past few years due to rising transmission costs and an unseasonably cold winter in 2024-2025.
Aging buildings require constant maintenance, and new local laws (such as Local Law 97) mandate costly energy efficiency upgrades.
Despite these rising costs, rent adjustments have not kept pace. For example, in 2023, the RGB approved a 3% increase on a one-year lease, even though the RGB’s own data said an increase of 8.1% was necessary to prevent building deterioration.
Declining Net Operating Income (NOI)
Net Operating Income (NOI) is the amount of revenue left after paying operating costs. It is used to cover debt service, capital improvements, and other essential expenses. However, NOI has been declining steadily for rent-stabilized buildings, particularly in older buildings outside Manhattan.
From 2020 to 2023, inflation-adjusted NOI has dropped by 26.6% for buildings constructed before 1974 and located outside the core of Manhattan.
In the Bronx, inflation-adjusted NOI decline from 2020 to 2023 was 36.8% for Pre-1974 buildings.
When NOI declines, the value of the building declines, making it virtually impossible for owners to secure financing for large repairs or mandatory improvements.
COVID-19 Impact
The pandemic led to a massive surge in nonpayment of rent. Rent-stabilized building owners used the majority of their building reserves to pay for emergency expenses and cover losses in revenue, with hope that they would be compensated eventually. Unfortunately federal Emergency Rental Assistance Payments only covered about half of the lost revenue for most older rent-stabilized buildings and reserve funds were never replenished.
Skyrocketing Interest Rates
Rising interest rates have further exacerbated the financial challenges for building owners. The rapid rise in interest rates in 2022 has put multifamily properties in a dire financial situation. The majority of rent-stabilized buildings have to refinance every five to seven years. Additionally, buildings must take out loans to pay for large expenses like the replacement of elevators, roofs, or boilers. The high interest rates coupled with declining NOI eliminates a buildings access to financing.
The Impact of Inadequate Rent Adjustments
When rent adjustments fail to keep up with rising costs, buildings are defunded. This leads to:
Deferred Maintenance – Owners are forced to delay essential repairs and upgrades, leading to deteriorating living conditions for tenants.
Loss of Affordable Housing – Without adequate funding, buildings may fall into disrepair and eventually be removed from the rent-stabilized housing stock.
Limited Access to Capital – Declining NOI and rising interest rates make it nearly impossible for owners to secure financing for necessary repairs or energy efficiency upgrades.
The Role of the RGB in Preserving Rent-Stabilized Housing
The RGB plays a critical role in ensuring the long-term viability of rent-stabilized housing. By approving rent adjustments that keep pace with rising operating costs, the RGB can help prevent the deterioration of this vital housing stock. However, in recent years, the RGB has consistently approved rent increases that fall below the actual rise in costs, leading to a growing financial crisis for many buildings.
We urge the RGB to take a holistic view of its role and approve rent adjustments that protect the financial health of rent-stabilized buildings. Without adequate adjustments, the future of rent-stabilized housing in NYC is at risk.
What Can Be Done?
1. Adequate Rent Adjustments
The RGB must approve rent adjustments that reflect the actual rise in operating costs, including inflation, property taxes, and energy efficiency mandates.
2. Government Support
Elected officials must advance pro-housing policies that provide financial support to both tenants and building owners. This could include tax relief, grants for energy efficiency upgrades, funding for mandatory improvements, and expansion of vouchers.
3. Long-Term Solutions
The city must develop long-term solutions to address the growing financial challenges facing rent-stabilized buildings. As proposed by the NYU Furman Center, rent adjustments should be tied to operating costs and inflation and not subject to a political process. The state legislature should consider property tax relief for buildings that are failing.