New York City's market-rate tenants may shoulder the financial impact of the city's newly approved two-year rent freeze, according to Arpit Gupta, the sole economist on the Rent Guidelines Board (RGB) and its only dissenting vote.

The RGB voted 7-1 to implement the rent freeze, a key promise of Mayor Zohran Mamdani. Gupta, an associate professor of finance at New York University's Stern School of Business, argued that the freeze will create an imbalance in the housing market.

"I think of this as trying to breathe with one lung," Gupta stated. "You have one half of the housing market now that’s just going to be frozen in place, so all the demand has to be accommodated by just the market-rate units, so I expect upward pressure on rents to those."

Approximately 1.1 million market-rate apartments, representing 48% of the city's rental units, are outside the rent-stabilization system. In contrast, there are 960,700 rent-stabilized units, with a significant 57,000 vacant. Data from NYC's Housing and Vacancy Survey indicates that a substantial portion of rent-stabilized tenants, up to 30%, earn six figures.

Gupta expressed concern that the freeze could exacerbate the issue of vacant rent-stabilized apartments, as owners might perceive no viable way to recoup rehabilitation costs for vacant units. He noted that 10% of rent-stabilized buildings are already operating at a loss, with thousands facing foreclosure.

"The key thing is the rent stabilized stock is not income restricted or targeted in any way," Gupta said. "Many people in market-rate housing are quite poor…and they’ll face upward pressure on their rents and many poor individuals will suffer as a consequence."

Christina Smyth, one of the two landlord representatives on the board, resigned in protest hours before the vote, calling the proceedings "theater" and asserting that the outcome was predetermined regardless of public comment or data. The RGB's decision to freeze rents for two years was met with dissent from Gupta, who believes other board members approved the measure based on the assumption that taxpayer funds would ultimately subsidize the housing market.

"They believe that more city resources can and will go towards the funding of these buildings," Gupta commented.