New York City just froze rent for two years on roughly 1 million apartments. That covers about 40% of the city’s rental supply.
On the surface, it sounds like a win for renters. But the policy trades a short-term gain for long-term pain.
Why politicians love rent freezes
Nobody boos a rent freeze. No politician has ever stood at a podium, promised to cap rent, and heard the crowd say no.
Renters are getting squeezed by inflation, flat wages, and rising costs. Those pressures are real. The frustration behind the policy makes sense.
The problem shows up later, in the consequences almost nobody talks about on day one.
The math problem for landlords
Here’s the core issue. A rent freeze locks a landlord’s income in place. Their expenses keep climbing anyway.
Property taxes go up. Insurance goes up. Utilities go up. But the rent stays flat for two years.
It with a simple question: how would you feel if someone froze your paycheck but raised all your bills?
When income is flat and costs rise, cash flow shrinks. That leftover money is what normally pays for paint, air conditioning, carpet, and landscaping. When it dries up, maintenance gets deferred. Over time, rent-controlled buildings tend to fall into worse shape because owners can’t afford to keep them up.
Fewer apartments for everyone else
The freeze covers rent-stabilized units, which make up about 40% of the city’s supply. People living in those apartments now have a strong reason to never move.
That pushes everyone else into a fight over the remaining 60% of market-rate units. Less turnover means fewer options, and fewer options push market-rate rents higher.
There’s a second effect on top of that. Investors, developers, and lenders all have choices too. When a city caps income on rental property, money quietly moves to places where it’s treated better. One national lender out of San Francisco has indicated that his firm was avoiding the coasts entirely, partly because of rent control in the Northeast and cities like Seattle, Portland, and San Francisco.
No investment means no new construction. And no new construction means the housing shortage gets worse, which is the very problem the freeze was supposed to fix.
The St. Paul warning
This has been tested before. In 2021, St. Paul, Minnesota passed a 3% annual rent cap that applied even to new construction.
Apartment construction permits fell 80%. Developers simply stopped building. The city eventually had to exempt new construction from the cap just to get projects moving again.
The pattern repeats across the country. Cities with rent control laws tend to have the highest rents. When builders avoid a market, supply stays frozen while more people keep moving in. Rents climb year after year, even with a cap in place.
What Phoenix shows about the other approach
Phoenix as the flip side of the story. So many apartments have been built there that rents have dropped.
Renters in downtown Phoenix can currently find brand-new units offering two, three, even four months free on a 12-month lease. Supply created those deals, without any government mandate. When tenants have lots of choices, landlords have to compete for them.
The lesson is basic supply and demand. Too much of anything, whether it’s cars on a dealer lot or concert tickets, pushes prices down. Too little pushes them up.
What would actually help
Asked what he’d tell a governor, Ken pointed to the entitlement process, which is the approval pipeline developers must go through before building anything.
Builders can’t control lumber, concrete, or land prices. But cities control permits, fees, and timelines. In many places, getting approval to build takes years and costs a fortune before a single unit goes up. Those costs get baked into rents.
Speeding up approvals, cutting fees, and acting more like a partner would let developers deliver more units, faster and cheaper, to the markets that need them.
The bottom line
Affordability is a real crisis hitting Main Street hard. The disagreement is over the cure.
Rent freezes feel good immediately and win votes. But the historical record, from Oregon to St. Paul to New York’s own decades of rent control, suggests they lead to deferred maintenance, frozen construction, falling property values, and higher rents for everyone outside the protected units.
The durable fix, in their view, is more supply. Whether more cities follow New York’s lead or learn from St. Paul’s reversal is the question to watch over the next five years.
