This Is the Kind of Overregulation that Makes New York Unaffordable

The city council's plan to require plumbers to install all gas appliances in the city is an obstacle to Zohran Mamdani's pledge to freeze rents

Dear readers,

Last week, the New York City Council passed, by a vote of 47 to 1, a bill that would require installation of all gas-powered appliances to be completed by a master plumber, or a journeyman plumber working under their direct supervision — even where a new appliance is being installed in the same location as an old appliance with no change to the gas line. These installations are simple and routine enough that building superintendents typically handle them now. In the rest of the country, if you buy your new gas appliance from a big box retailer, the person who delivers it will also install it — here’s the Home Depot explaining how their non-plumber technician will install your gas range for you.

New York landlords are warning that this new rule will increase costs — hundreds of dollars to install an appliance, which will ultimately flow through to rents — and also cause delays for tenants in need of new appliances. In New York City, there are only about 1,000 master plumbers available to service 2.3 million rental units.

But the trade association for master plumbers in New York has argued strenuously that this work should be reserved to master plumbers for safety reasons, and now the council has overwhelmingly agreed.

This sort of thing is why it’s so expensive to live in New York. We are burdened with a zillion little regulations that all have their own arguments for why they’re a good idea, but that ultimately make everything we do cost more than in a less regulated jurisdiction. (The festooning of our beautiful city with protective scaffolding, supposedly necessary for safety and yet suspiciously absent in similar cities like Chicago, is another key example.) The 47-1 vote reflects the power that a constituency like the plumbers have — progressive Democrats like them because they’re a labor group, while Republicans and conservative Democrats see them as their kind of labor group. And it’s exactly the sort of nice-sounding policy idea that lawmakers need to start resisting if they hope to make life more abundant.

My hope is that Mayor Eric Adams will veto the bill — “we are reviewing this bill,” a spokesman for his office told me, adding that “every step the City Council takes must be guided by the same lens we use: how to make this more affordable for working-class New Yorkers.” But I’m particularly interested to see where our likely next mayor, Zohran Mamdani, lands on the matter of gas-hookup policy.

Under a new law that has passed the New York City Council, gas appliances in New York wouldn’t all look this fancy, but they’d come with a fancy price tag to get a master plumber to oversee their installation. (ChatGPT image generation)

Mamdani’s signature campaign pledge is that he will freeze rents on rent-stabilized apartments, which are about half the total rental apartment stock in the city, for all four years of his term. The mayor gets to appoint the members of the Rent Guidelines Board, which sets allowable rent increases for regulated apartments, and he’s said his appointees will implement a freeze. While there is precedent for a freeze — the board set the allowable rent increase at zero for three of the eight years that Bill de Blasio was mayor — Christian Browne, a former Giuliani administration official, has argued in City Journal that a freeze pledged in advance would be illegal. The board has to represent a variety of stakeholders, including landlords, and must follow legal guidelines when determining the increase; Browne says promising a particular result rather than letting the board do its required calculations will open them up to a legal challenge from landlords. The economic environment for landlords is also different than it was under de Blasio, because a 2019 law tightening rent regulation has sharply reduced the value of rent-stabilized buildings, and further rent suppression could lead to foreclosures.

The New York Editorial Board had an interesting conversation last week with de Blasio, in which they asked him whether Mamdani’s freeze pledge is feasible in the current environment. De Blasio is a strong Mamdani supporter, but his answers about the freeze were qualified. De Blasio said that an element of the 2019 reform went too far: the reform imposed too much restriction on how landlords can raise rents to recoup the costs of capital improvements to buildings. That reform needs to be reformed, he said; such a reform would create financial breathing room for landlords that would make a rent freeze workable.

I think Mamdani would be wise to take to heart an even broader version of de Blasio’s point. To the extent the city takes steps to reduce the cost of operating a building in New York, that makes it possible to lower rents. It makes it possible for market forces to push down market rents on unregulated units, and it makes it possible for the Rent Guidelines Board to impose lower rents on regulated units without running afoul of the law or pushing landlords into foreclosure.

Really, I should say that Mamdani has apparently already taken this issue to heart. He acknowledges that he has to help landlords bring down their operating costs in order to make a rent freeze work. And while landlords strongly oppose his rent freeze proposal, he’s been singing from their hymnal on the need to reform property taxes (New York’s property tax system disfavors rental apartments compared to owner-occupied homes, and property taxes make up about 30% of the operating cost for a typical rent-stabilized building) and bring down property insurance rates. That said, mayors have been talking for decades about the need to reform the property tax system to reduce the burden on apartments, and there’s a reason the reforms never get done: a revenue-neutral reform to reduce the apartment penalty would have to raise taxes on New Yorkers who own their homes, who would squeal.¹

Since Mamdani is likely to fail in the same way other mayors did on the property tax issue, he’s going to need to get creative. He should be getting the city council to look for costly regulations to repeal, instead of adding new ones like the gas appliance hookup rule. This might be a good place for a commission — beyond his smart pledge to abolish the cap on halal cart permits,² what regulations could a smart group of city government experts propose for repeal in order to lower the cost of doing business in New York and therefore make it possible to freeze the rent? And could Mamdani use his political mandate to get such reforms through the council?

My ideological compatriots are fond of saying rent control doesn’t work, but that depends on what objective you’re talking about. Rent control doesn’t “work” in the sense that it does not alleviate a housing shortage and can discourage new investment in housing while raising rents for new entrants to the city. But it does work in the sense that a rent freeze would lower the cost of living for New Yorkers who already live in the city’s 1 million rent-stabilized apartments. Lots of those tenants voted for Mamdani because of his pledge, and they expect to get it. He’s a lot likelier to be able to deliver on his pledge to freeze the rent if he finds ways to make New York a less costly place for landlords to do business.

Of course, there’s always a lobby that likes any regulation that adds cost, and Mamdani’s going to have to step on some toes if he follows the approach I suggest. He wouldn’t be making the plumbers happy. But that’s the thing about trade-offs: it’s not fun to talk about them in a campaign, but navigating them effectively is essential to maintaining popularity once in office. We’ll see what he actually does.

Very seriously,

Josh

1. I’m a little more optimistic that he could have success on insurance reforms, but that’s also an issue where reformers will have to fight entrenched lobbies like trial lawyers who would hate the reforms that would be needed to reduce claims and therefore premiums.

2. Mamdani’s broader cost-of-living agenda also reflects an understanding that reducing costs to businesses is an important part of reducing prices for consumers, and that sometimes deregulation is the way to get there. Most famously, his plan to fight “Halalflation” — he hopes to bring the price of a meal from a halal chicken-and-rice cart back down from $10 to $8 — relies on eliminating the city’s cap on cart licenses, so cart operators no longer have to pay tens of thousands of dollars a year just to rent a license.