What Would Happen If New York Ended Rent Control?​

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NY tried it for “luxury” apartments in the 1990s, and it boosted the supply of housing.

NYC tenants demanding a rent freeze, which Mayor Mamdani enacted in 2026. Source: The Gothamist

“To allow these protections to lapse, eliminating our major source of affordable housing, would mean certain disaster.” – New York State Senator Bill Perkins (D-Harlem).

But that is exactly what happened in 1993 for “luxury” rental apartments, initially those renting for more than $2,000 per month. Rent controls were simply allowed to lapse at the end of leases if the rent were already above that amount or if the owner had an income above $250,000 per year.

Was it a disaster, and when Mayor de Blasio finally succeeded in repealing it 26 years later in 2019, did that end the affordability crisis and lead to an abundance of housing? We will use this experiment to explore the broader question:

What would happen if New York City ended rent control completely?

The 1993 “luxury decontrol” and re-regulation in 2019 provide us with what economists call a “natural experiment.” One cannot simply test economic policies on human beings like lab rats. It is very difficult to set up a control and treatment group to isolate the effect of a policy.

But sometimes, accidents of circumstance provide economists with a natural experiment. NYC’s experiment beginning and then ending partial rent decontrol can help us answer the broader question.

Throughout this article, I use “rent control” broadly to include any form of rent regulation. In New York City, “rent control” is a jargon term that refers to the original, strict system of rent control, enacted in 1943, while “rent stabilization” applies to a somewhat looser version of rent control implemented in 1969. Out of the approximately 1,000,000 rent regulated apartments in NYC, a rapidly diminishing number – currently, around 24,000 – are “rent controlled.” The rest are “rent stabilized,” a looser system where the city decides whether rents can increase at biannual hearings. To simplify the discussion, and in line with popular usage, we will simply refer to any form of rent regulation as “rent control.”

To evaluate the outcome of this experiment, we will focus on two dimensions that best capture the state of New York City’s housing shortage: the number of apartments and their availability. When new apartments are built, more become available for rent.

New York City’s Successful Experiment with “Luxury Decontrol”

Between 1993, when luxury decontrol began, and 2017, the last survey before its 2019 repeal, New York City’s private unregulated rental stock grew from approximately 581,000 to 937,000 apartments—an increase of 356,000, or 61%. Over the same period, rent-controlled and rent-stabilized apartments together declined by approximately 127,000, or 11%, from 1.115 million to 988,000. The expanding unregulated sector not only included formerly regulated apartments that were deregulated, but it also includes the construction of more than 200,000 new rental apartments.

Note: Counts combine occupied apartments and apartments vacant and available for rent. Survey classifications vary over time. Sources: NYC inventory data for 1993 and 2017.

Deregulation also made it much easier for prospective tenants to find apartments. The vacancy rate measures how hard it is to find an apartment. A lower vacancy rate means endless more hours of frustration before finding your dream apartment. In 1993, when “luxury” decontrol began, the vacancy rate was 5.06% for unregulated apartments, compared with 3.36% for stabilized apartments—about one and a half times as high. By 2017, that gap had widened to nearly three times: 6.07% versus 2.06%. Following the end of luxury decontrol in 2019, the unregulated stock continued growing, reaching approximately 1.139 million apartments in 2023, but availability tightened sharply across both sectors: vacancy fell to 1.84% in market rentals and 0.98% in stabilized apartments.

Note: The vacancy multiple divides the unregulated rate by the stabilized (regulated) rate. Sources: 1993 vacancy data, 2017 comparison, and 2023 findings.

This data shows that luxury decontrol encouraged developers to build more apartments which, in turn, resulted in a higher vacancy rate: more apartments became available to rent. The two sets of data show that the apartment shortage – the extreme difficulty of finding apartments available for rent – effectively ended during those years, but only in the deregulated high-rent “luxury” portion of the market.

In contrast, in the still-regulated low-rent apartments, the shortage remained, driven by lack of new supply (landlords had no incentive to build) and the fact that rent-controlled tenants would stay in their apartments for a much longer time, because of their below-market rents. The average tenancy for rent-regulated apartments is 12 years, double the 6 years for market-rate apartments.

If rent regulations were abolished across the board, it would rationalize the market, causing the two rents – regulated and market – to converge over time. This would end a strange phenomenon found only in regulated rental markets like New York’s. That is the phenomenon where two identical apartments in a single building have wildly differing rents.

For example, in Stuyvesant Town, a large rental complex in Manhattan, I know of two people renting identical 2-bedroom/1-bath apartments in the same building. One person, who has lived there for years with low controlled rents pays only $1,450 a month, while her neighbor is stuck paying a market rent of $5,025 per month. Such discrepancies are unfair with the market tenant effectively subsidizing and paying for part of her regulated neighbor’s rent. Abolishing rent regulation would raise the low, regulated rent, but it would also lower the high market rent, and the resulting system of rents would be fairer.

When Price Controls End, Supply Expands and Market Prices Fall

Price controls have been applied to many products besides rental housing. In every case when those controls were lifted, the worst fears did not materialize. People tend to believe that when free markets are re-established, prices will rise as greedy suppliers can now “gouge” customers. But suppliers, landlords or otherwise, cannot repeal the law of supply and demand. New supply, unleashed by the profit motive, acts to contain or drive down prices, as each supplier competes with each other for customers.

Outside of housing, one of the most significant of these deregulations occurred in the U.S. oil industry. Because prices had already been capped for decades at regulated levels far below the global market level, American production was languishing when the Arab Oil Embargo hit in the 1970s, resulting in enormous shortages and block-long lines at gas stations.

Later, when economists and oil producers persuaded President Jimmy Carter, followed by Ronald Reagan, to decontrol prices in the late 1970s and early 1980s, people feared that gas prices would spike. Instead, the opposite happened. Incentivized by market prices and higher profits, U.S. production soared, and prices fell in real terms for the next several decades. So much new drilling and new production was added that the U.S. went from importing 40% of its oil in 1980 to being a net exporter of oil today.

Similarly, new housing construction would rapidly increase if rent control were abolished, especially if this were paired with other reforms such as loosening zoning restrictions that limit the size of new buildings.

Other Experiments with Rent Deregulation

“Cambridge experienced an overall investment boom after the end of rent control.”

— David Autor, Christopher Palmer, and Parag Pathak, Journal of Political Economy, June 2014.

In Massachusetts, voters ended rent control in 1994, with decontrol taking effect in Cambridge in 1995. Research by Autor, et al., found substantial gains in property values, including spillovers to nearby properties that had never been controlled, alongside increased investment. Higher property values are not themselves proof of lower rents; the lesson is that removing controls will improve the incentive to invest in housing and the quality of surrounding neighborhoods. Ultimately, this means that housing will be of higher quality and lower rent than otherwise would have happened.

Finland provides another example: an OECD study reports that, following deregulation during the 1990s, private rental housing grew from 12% of the housing stock in 1990 to 17% in 2012. That experience supports the prediction that ending rent control in NYC would boost supply, as developers would find it profitable again to build new rental housing.

Unfortunately, recently the overall trend around the world has been to expand rent control. This momentum has increased sharply in the past 10 years. In New York City, Mayor Mamdani campaigned on a platform of freezing rents, and he has just recently fulfilled his campaign promise. Rents are now frozen while all other costs – such as fuel oil (think Iran War oil prices), labor, and materials – continue to rise with inflation, currently standing at 3.7%. This means that in real, inflation-adjusted terms, Mayor Mamdani has actually instituted a rent reduction.

Source: author’s compilation of 24 selected national, state, and local measures.

Despite the growing momentum of rent control, there have been several moves away from rent control in recent years: Berlin’s additional cap was invalidated in 2021; Argentina repealed its rent control law for new rental contracts in 2023; Saint Paul, Minnesota, loosened its controls in 2023; and Scotland’s temporary cap expired in 2024.

The Fight to End Rent Control Through the Courts

Landlords have also repeatedly sought relief through litigation challenging the constitutionality of rent control. Most of those cases have argued that rent control amounts to an uncompensated taking of property. Unfortunately, the broadest of these cases have not been successful, although the Supreme Court left open the possibility of relitigating them. A recent, more narrowly tailored case challenging rent control on vacant apartments, which may have greater chance of success, has not yet been decided.

Legal Challenges to New York’s Rent Regulations

Sources: Harmon; CHIP; Pinehurst; G-Max; Small Property Owners.

Why Rent Control Must End

Rent control destroys housing, both existing housing and potential future housing which never gets built. As a result, it makes the remaining housing more expensive by reducing the supply. This applies to both rental housing (in the cases where some rents are allowed rise to market levels) and owned homes and condominiums.

During the 1970s, severe rent control coupled with high inflation meant that thousands of landlords lost money on their buildings and, ultimately, had to abandon them. This harmed everyone: the landlords who lost their life savings, tenants who lost their apartments, newcomers to New York who had fewer housing options, and the overall financial health of the City, which lost billions of dollars in tax revenues and went bankrupt in 1975.

Abandoned buildings like these were common sights throughout NYC during the 1970s and early 1980s. Charlotte Street, The Bronx, New York City, circa 1980. Photo by Steven Siegel.

I described the 1970s rent control debacle in my article, “Mayor Mamdani Discovers the Bankruptcy of Rent Control.” Here is an excerpt:

Once the legal rent on a building falls below the cost of maintaining it, the building ceases to be an asset. It becomes a liability. That is when owners begin to walk away.

And in New York, they did — first by the hundreds, then by the thousands, then by the tens of thousands. The result was not merely bad maintenance. It was abandonment, arson, vacant lots, and the devastation of entire neighborhoods. The loss of population due to abandonment was so high that nearly a million New Yorkers left the city; during the 1970s, the population of NYC shrank from 7.9 million to 7.1 million people.

“The Bronx is burning” was not just a phrase. It was the visible image of a city that had tried to repeal the laws of economics. The Bronx burned. So did parts of the Lower East Side, the East Village, Bedford-Stuyvesant, Fort Greene, East Harlem, Central Harlem, West Harlem, and other neighborhoods across the city.

That catastrophe was not caused by too much freedom in housing. It was caused by high inflation and decades of political control over housing. Now we face rising inflation again, and if rents [remain] frozen, it will be the 1970s all over again.

The Political Challenge

To bring back a sustainable abundance of rental housing, NYC needs to end all forms of rent regulation. However, there are still 1.02 million regulated apartments (out of a total of 3.7 million homes of all types, apartments, condos, and houses) in the city. It would not be fair or feasible to end rent control in one go for these regulated tenants, many of whom have lived in their old, often poorly maintained apartments for decades. The only sensible way to end it would be through a phased transition via legislation.

New York has tried to do this in the past. In 1971 it established “vacancy decontrol,” where rents would become unregulated when tenants vacated their apartments. However, for many apartments, the prior, regulated rent was so low that landlords faced a disproportionate incentive to kick tenants out in order to get the rent increase. Some unscrupulous landlords employed tactics such as putting glue in locks, turning down heat, and moving thugs or drug dealers into the building to scare the tenants into leaving. In part due to this experience, the short-lived experiment with vacancy decontrol was repealed and most of the apartments were re-regulated in 1974.

However, NYC’s experience with “luxury” decontrol, begun in 1993, presents a way forward. Decontrolling “luxury” rentals had exactly the intended result: construction and rehabilitation of hundreds of thousands of new apartments, and much greater apartment availability. The problem is that NYC ended this program in 2019 and, more recently, has doubled-down on regulation with Mayor Mamdani’s recent rent freeze.

Instead of freezing rents and further harming the housing market, NYC needs to reinstitute some form of luxury decontrol, and then establish a phased transition out of rent control for the other “non-luxury” regulated apartments. The transition period should not be too long, because a long transition will fritter away political support.

My suggestion is 5 years. Have a rule that the rent can go up each year by $100 or 10%, whichever is larger, until it reaches a market level. Or, once 5 years have elapsed, rent will go to market with the next lease renewal. This gradual transition will give tenants benefitting from regulated below-market rents a long lead time to downsize, take in a roommate, move to a cheaper neighborhood, or secure a higher-paying job.

What would happen if NYC did this? Well, just like we observed from NYC’s real-life experiment in deregulation from 1993-2019, the availability of apartments — this time at all rent levels — would increase. As more apartments become available through new construction, rehabs, and tenants moving, finding an apartment will become much easier. The housing shortage will end. This happened very quickly with “luxury decontrol.” There is no reason to think it won’t be equally fast for all tenants, with full decontrol.

As this takes place, market rents would stabilize and eventually fall (compared to what they otherwise would have been). New York would no longer be the city with the highest rents in the U.S. (That honor would most likely pass to San Francisco, which also has rent control and in most years is usually in a neck-and-neck race with NYC for the title of most expensive market rents.)

Rather, New York would begin to have much more reasonable rents on higher quality, well maintained apartments, like other U.S. cities that never experimented with rent control. The ubiquitous, 150 year old walk-up tenement, that too many New Yorkers today live in, would give way to many more modern, elevator high-rises.

Formerly regulated rents would initially rise in most cases, because most of these regulated rents are below market. However, new, higher quality apartments would become available for the formerly regulated tenants.

Both existing tenants and newcomers to the city will find more modern apartments becoming available. Average housing quality would improve, while market rents simultaneously would fall over time from what they would have been. To be fully successful, ending rent control must be coupled with making it easier to build new housing. Restrictive zoning laws must be loosened, which I explain in my article, “The High Cost of Light and Air: A Critique of Zoning.”

These two moves — rent freedom and the freedom to build — would make New York become a city in which finding an apartment would no longer depend on being wealthy, having parents co-sign your lease, winning a housing lottery, suffering long commutes, living in tiny or squalid apartments, or having an unwanted roommate. Instead, it would depend much more on being able to choose from an abundance of reasonably-priced, quality apartments that landlord owners are competing with each other to provide.

Calling for Courageous Political Leaders

The simple fact that tenants vastly outnumber landlords makes rent control very difficult to repeal politically. Despite its well documented track record of failure, which is taught in every introductory economics textbook (I first learned about NYC’s rent control failures in college in Florida in the early 1980s), it remains politically popular. I would like to think that my economics students — like me when I was studying economics in college — have learned that price controls in any form only create shortages, and vote for their political leaders accordingly.

Yet most people are not trained in economics. They see the high market rents they are paying for substandard, tiny apartments, and they blame one culprit: landlords. But landlords are just responding to incentives. And the incentives created, for example, by Mayor Mamdani’s recent rent freeze are not conducive to new housing construction or the maintenance of existing units. In fact, in an echo of the 1970s widescale abandonment of apartments, NYC today is experiencing a growing problem of vacant apartments.

Under the 2019 rules that ended luxury decontrol, landlords could no longer pass on most of the costs of upgrading apartments. So, landlords now face an impossible choice. In the past, they could upgrade old, dilapidated apartments and pass on much of the costs to tenants by raising rents closer to market levels. That avenue has now largely been foreclosed.

That leaves landlords with the unpalatable option of re-renting the apartments at artificially low, regulated rents, and under NYC law, those tenants can never be evicted (except for non-payment of rent and certain egregious behavior), and can even pass on their rent controlled apartment to their heirs! This would mean that with even one of these tenants in their building, a landlord could never tear down that old 150-year-old walk-up tenement building and build a new, modern elevator apartment building in its place (unless the landlord pays an extortionate sum to the tenant to move out, a perfectly legal practice in NYC). This problem of holdout tenants is a major reason why the housing stock in NYC is so old.

Instead of facing this unpalatable choice, landlords are increasingly just leaving apartments vacant when tenants move out. This preserves for them the future options of tearing down the building and redeveloping the property, or selling it to someone else at a higher valuation. Currently, over 57,000 apartments are vacant in NYC, and that number appears to be growing rapidly in the face of Mayor Mamdani’s rent freeze.

Will rent control ever end in NYC?

Although I am unable to locate the source, years ago I read an account of one of the biannual hearings where NYC’s Rent Guidelines Board decides whether and how much to permit rents to rise in rent stabilized apartments. (At the most recent of those hearings, under Mayor Mamdani’s direction, that allowed increase was zero.)

The reporter described a raucous scene reminiscent of the photo at the beginning of this article. The hearing room with the nine housing commissioners was thronged by chanting tenants carrying signs saying “Rent freeze” and “Rent rollback.” Scattered among the audience members were a handful of building owners, whose financial fate would be decided by the nine members of the Commission.

Tenement buildings in New York City

Back then (this event happened in the late 1980s, as I recall), many of the ubiquitous 150 year old walk-up tenements, which are scattered across much of New York City, were typically owned by “mom-and-pop” landlords. Often these landlords were recent immigrants or first generation Americans who saved their entire lives to buy a building. The rental income of that building was their retirement.

After the Commission reached their decision to barely raise the rents, one of these small landlords approached a commissioner with tears streaming down his face. He said, “Don’t you know that you are killing me with these small increases?” The commissioner pointed to the people in the room. He said, “Look around you. There are 20 of them for each one of you.”

By “them” he was referring to the tenants. The tenants vote. And they vastly outnumber the landlords, whom they blame for their difficult housing situations.

The nine commissioners were willing to destroy that man’s life savings in order to secure political votes.

The huge numerical imbalance between tenants and landlords, and the economic ignorance of tenants who believe rent control helps them, explains why rent control has lasted so long in New York.

But, despite such dismal political economy, NYC did significantly decontrol rents in 1993 with luxury decontrol. Moreover, other jurisdictions have ended rent control. The state of Massachusetts voted to abolish it, and overruled the city of Cambridge, which was forced to end their rent control. And, although not yet successful, litigation to abolish it is increasingly reaching the Supreme Court.

Recently, St. Paul, MN, which had instituted rent control in 2021, loosened it considerably several years later, after new housing construction cratered in that city, while sister-city Minneapolis, which never regulated rents, experienced a boom in housing construction.

It was easier to end rent control in Massachusetts where most residents are homeowners, not renters. But in NYC, where most people rent, and there are still approximately 1,000,000 rent-regulated apartments, the politics is more difficult.

It will take political courage to make the change, but all good things do. And if we have seen such courage in other cities, it can happen (again) here in New York.

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