Zohran Mamdani has succeeded in making “affordability” the primary driver of the present political debate.
As a long-shot candidate, Mamdani was able to campaign on a promise to “freeze the rent” for rent-stabilized tenants without significant scrutiny. Later, when Mamdani emerged as the frontrunner, he faced increased pressure to explain how he would hold the line on rents while ensuring that landlords would be able to meet the rising costs of maintaining their buildings.
Because the rent regulations limit the amount by which the landlords can raise rents, owners of regulated units increasingly have been unable to break even as the costs of running a building have ballooned.
In response, Mamdani rightly admitted that government needs to address the areas where law, regulation and policy are the drivers of higher costs that, in turn, place upward pressure on rents. He acknowledged the importance of property tax reform and, in his meeting with President Trump, agreed that government must help to reduce energy costs.
For owners of regulated buildings, no cost has grown faster than the expense of purchasing insurance. A housing report found that, between 2019 and 2023, the cost of insuring a rent-regulated unit more than doubled, growing to an average of $1,770 per unit. The cost of insurance alone, makes it difficult for a landlord to earn even a small profit on a regulated building.
The situation became so dire that in 2024 a group of stabilized owners formed their own insurance company, known as Milford Street Association Captive Insurance Company. This captive insurer provides policies to owners that are now unaffordable on the commercial market. Mamdani repeatedly referenced Milford Street during the campaign when suggesting that tort and insurance reform would be a way to drive down landlords’ expenses.
According to data presented by Milford Street at a recent state Senate hearing, there are presently almost 77,000 slip-and-fall cases pending in New York courts, 70% of which are here in the city.
Most cases are commenced by “form” complaints that lack basic factual allegations. They do not explain the nature of the owner’s negligence or the nature and degree of the plaintiff’s injuries. Instead, with a few minutes work, lawyers (more often paralegals), file a “fill-in-the-blank” form that starts the personal injury assembly line.
Once sued, an owner sends the claim to its insurer; the insurance company must then shell out money, first to defend the claim, and later, in most cases, to pay out a settlement. At a conservative average estimate of $50,000 per case for defense and settlement costs, the current volume of slip-and-fall cases carries a price tag of nearly $4 billion.
The growing use of “litigation financing” has contributed to the explosion of personal injury claims. Litigation financiers pay a plaintiff’s litigation fees, gambling that the plaintiff will prevail and pay out a hefty percentage of the recovery to the funder. Lawyers are not required to disclose the use of such funding, nor is there any regulation on the amounts financier may take off the top of settlements or any restriction on their ability to push for outcomes that would be in their best interest, and not necessarily those of the supposedly injured plaintiffs.
The spiraling insurance costs that result from this litigation free-for-all are destroying the finances of affordable buildings. If Mamdani wants to fulfill his promise of widely-available affordable housing, he will need to persuade his Democratic allies in Albany — Gov. Hochul, Assembly Speaker Carl Heastie and Senate Majority Leader Andrea Stewart-Cousins, all of whom endorsed him — to support the tort reforms necessary to save affordable housing from financial ruin.
Tort reform would not only reduce financial pressure on the landlords but would also unlock billions of dollars for housing investment that now go to pay for the endless barrage of slip-and-fall claims.
Such reforms would, for example, require attorneys to plead specific facts when commencing personal injury cases; shorten the statute of limitations to one year from the date of an accident and cap pain and suffering awards for routine cases. The law should also require disclosure of the use of litigation financing, limit the percentage financiers may receive and prohibit their interference with the attorney-client relationship.
An affordable building must be affordable for tenants to occupy and for a landlord to own. The government cannot “freeze” costs or eliminate the effects of supply and demand. But it can reform the tort system to free billions of dollars for re-investment into our regulated housing stock, and reduce the upward pressure on rents, not through artificial “freezes,” but according to the laws of economics.
Browne is a lawyer.
