In 1971, the Swedish economist Assar Lindbeck offered a famous critique of rent control: “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.”
Since then, economists have distinguished between different forms of rent regulation. The “first-generation” systems Lindbeck had in mind impose fixed nominal price ceilings: rents remain frozen even if landlords’ operating costs rise, and the rental price carries over when one tenant leaves and another moves in. By contrast, “second-generation” systems limit how much rents may rise during a tenancy, often through formulas that account for inflation or operating costs, while allowing rents to move closer to market levels when an apartment becomes vacant.
Second-generation systems provide tenants with stability and predictable increases, though at some cost to housing efficiency. New York City’s rent-stabilization system, for all its flaws, has generally fallen within this category. Each year, the Rent Guidelines Board—of which I am a public member—sets permissible increases for regulated leases after reviewing changes in landlords’ operating costs and tenants’ incomes. Prior to the passage of the Housing Stability and Tenant Protection Act in 2019, landlords also had greater latitude to raise rents when apartments turned over or after making improvements. Since then, however, those avenues have been sharply restricted, leaving the annual increases approved by the board as the principal means of keeping regulated rents aligned with rising costs.
On Thursday, the Rent Guidelines Board formally adopted Mayor Zohran Mamdani’s proposed rent freeze, approving a zero-percent increase on both one- and two-year leases for the city’s roughly one million rent-stabilized apartments. The vote moves us one step closer to the first-generation rent-control model that Lindbeck described, threatening the long-term viability of a large share of the city’s rental housing.
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