NYC Rent-Stabilized Taxes Outpace Inflation, Report Finds

Tax Burdens Climb While Incomes Fall

According to the Commercial Observer, the latest State of New York City’s Housing and Neighborhoods report from the NYU Furman Center casts a harsh spotlight on the city’s rent-stabilized multifamily sector. According to the report, property taxes on legacy buildings with over 90% rent-stabilized units increased more than the rate of inflation between 2019 and 2025.

Meanwhile, operating incomes for these buildings have declined, putting their long-term viability at risk. With a median tax bill per unit of $3,082 per year and aggregate taxes reaching $1.5B across more than 463,000 stabilized apartments, owners’ concerns are growing. The study describes a worsening disconnect between tax burdens and the economic realities faced by some of New York’s most affordable rental stock.

The Details

The Furman Center’s analysis targets pre-1974 properties—where stabilized units exceed 90%—as being especially vulnerable. These assets were hit hardest by the city’s location-based ‘mass appraisal’ tax model, which does not differentiate between struggling and stable buildings. The report flagged that outdated formulas for expense caps and property valuations have left many owners unable to claim rising costs or reflect actual market conditions.

In Manhattan, more than 20% of legacy low-cost building owners exceeded the city’s 64% expense cap in 2024, a threshold originally meant to apply to just 10% of cases. The New York Apartment Association warned that, absent intervention, the sector faces ‘a financial cliff,’ while rising taxes account for more than a quarter of these buildings’ escalating operating expenses.

Legacy Tax Systems Add Pressure

NYC’s property tax framework faces fresh scrutiny. It treats rent-stabilized multifamily assets the same, regardless of financial health or tenant mix. The Furman Center found that the tax system groups distressed, 90% stabilized assets with much healthier buildings. Those healthier assets often have 50% stabilized units or less. As a result, weaker buildings face tax liabilities many can no longer carry.

That pressure also reflects a broader rent-stabilized housing squeeze, as rising costs continue to test NYC owners. These inequities compound other market pressures, including stagnant rents, deferred maintenance, and spiking insurance costs. Recent exits by lenders like OceanFirst Financial show how capital is pulling back from the sector. OceanFirst announced the sale of $1.4B in rent-regulated multifamily loans.

Why It Matters

The financial strain on New York City’s legacy rent-stabilized housing directly threatens affordability for hundreds of thousands of residents. According to the Furman Center, the city’s 463,333 legacy units represent one of the nation’s largest remaining pools of affordable housing. But with taxes rising faster than both inflation and allowable rent increases, many owners cannot bridge the gap between surging costs and fixed revenues, even before factoring in insurance, repairs, or debt service costs. The median tax bill per unit now stands at $3,082, contributing to a citywide total of $1.5B that undermines operators’ ability to maintain or upgrade older buildings.

Policy responses have failed to keep pace. City Hall rolled back plans for a broader property tax increase in May as part of its fiscal year 2027 budget—but without deeper reforms, the basic mechanisms driving strain on the stabilized housing sector remain unchanged. Outdated expense cap formulas, mass appraisal practices, and inflexible rent regulation have all compounded the risk profile for owners. With capital retreating, as evidenced by OceanFirst’s $1.4B loan sale, the threat of asset deterioration and even conversion out of affordability protections is growing. The Furman Center urged that reclassifying properties for tax purposes and updating expense formulas could help, but stopped short of calling this a cure-all, especially as operating costs rise across the board.

What’s Next

Calls for property tax reform are likely to intensify as the gap between the costs and revenues for stabilized buildings widens. The NYU Furman Center recommended overhauling how the city categorizes multifamily assets for tax purposes and updating the formulas used to cap expenses and value properties. Still, the report cautioned that tax relief alone will not resolve broader deficits if rent growth continues to lag expenses and inflation. Unless reforms take hold soon—and are paired with new revenue models or operating subsidies—New York City could see its largest affordable housing sector slip further into distress, with implications for tenants, investors, and lenders alike.