The United States Department of Housing and Urban Development (HUD) Secretary Scott Turner recently expressed concerns over the potential economic repercussions of New York City Mayor Zohran Mamdani's proposed property tax hike. Speaking on “The Alex Marlow Show,” Secretary Turner outlined the immediate impact that a 9.5% increase in property taxes could have on the city's residents, particularly working families.
According to Turner, the implementation of the tax hike is likely to result in increased rents, which could push some residents out of their homes due to affordability issues. The Secretary's comments come amid Mayor Mamdani's advancement of a $127 billion city budget, which includes measures to pressure Albany into approving higher taxes on millionaires and corporations.
Mayor Mamdani has presented two paths to bridge the city's budget gap. The first, which he deems sustainable and fair, involves raising taxes on the wealthiest individuals and corporations. The alternative, should the state government reject the proposed "rich tax," would be to raise property taxes by 9.5% across the board and potentially tap into the city's reserves.
Housing analysts have pointed out that while property taxes are directly levied on property owners, the financial burden often trickles down to renters, especially in tight housing markets. New York City's Department of Finance data indicates that rental properties are taxed at an average effective rate of approximately 12.4%. The proposed tax increase would elevate this rate to around 13.6%.
Landlords, especially those with numerous rental units, would see significant cost increases, which they may attempt to offset by raising rent prices. With New York City rents having already risen by 6.6% year-over-year and with a vacancy rate of just 1.4%, the pricing power remains in the landlords' hands.
Even rent-stabilized buildings, where rent hikes are capped annually, could face financial strain due to increased property taxes. This could lead owners to cut back on services, defer maintenance, or postpone capital improvements. The advocacy group Small Property Owners of New York has expressed that such a tax increase could be detrimental to smaller landlords.
Mayor Mamdani's recent appointments to the city's Rent Guidelines Board and his campaign promise to freeze rents on stabilized apartments further complicate the situation. Secretary Turner's broader framing of the issue emphasizes the potential for far-reaching consequences in the housing market due to rising operational costs.
As discussions continue in Albany regarding tax increases for high earners and as New York City officials consider their fiscal options, the debate over property taxes highlights the underlying question of who bears the ultimate financial burden in one of the nation's tightest housing markets.
