Rent control

New York Passed Sweeping, Progressive Rental Regulations. Now It's Getting Sued.

Landlords are suing to overturn state rental regulations that limit how much they can charge tenants and who they can rent to.

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New York's new rental regulations are an unconstitutional violation of landlords' due process and property rights, argues a new lawsuit filed this week in federal court.

Late Monday, the Rent Stabilization Association (RSA) and the Community Housing Improvement Program (CHIP), two landlord trade groups, filed a lawsuit against New York City, its Rent Guidelines Board (RGB), and the state and city officials responsible for administering the state's landmark rent stabilization law.

Essentially a form of rent control, the contested law limits how much the owners of rent-stabilized apartments can raise rents and imposes conditions on when tenants in those units can be evicted. In June, state lawmakers—led by a crop of newly elected progressive legislators who'd campaigned on a platform of "universal rent control"—passed a sweeping update to these regulations that piled on more restrictions still.

RSA and CHIP are arguing that New York's rent stabilization law is such a poorly designed and irrational means of providing affordable housing that it violates the Fifth and Fourteenth Amendments' due process protections. They also argue that the law prevents landlords from using their property as they see fit while reducing its value, both of which amount to an uncompensated government taking.

The June changes to the law, plaintiffs say, have only exacerbated these constitutional problems.

"Even before the draconian effects of the 2019 amendments, the New York Rent Stabilization Law was antiquated, inefficient, and unlawful," said Jay Martin, executive director of CHIP, in a statement. "The law actually makes New York's affordable housing shortage worse by preventing the construction of new apartments, and improvements to existing apartments."

"The law is not constitutional and punishes hard-working tenants and small landlords alike. Allowing it to continue to harm New York is no longer acceptable," said RSA President Joseph Strasburg in a statement.

CHIP and RSA are joined in their lawsuit by several individual property owners.

New York's rent stabilization law, first passed in 1969, generally applies to private apartment buildings of six or more units built before 1974 in New York City and a few neighboring counties. Allowable rent increases at these buildings are capped by local regulatory bodies, including New York City's RGB. This year the RGB allowed rent increases of between 1.5 to 2.5 percent.

Landlords are typically required to renew tenants' leases at rent-stabilized apartments unless they plan on taking their building off the rental market, or want to move into it themselves. Even then, removing occupants can be a years-long process. In the past, developers have paid tenants millions of dollars just to get tenants to move out of their rent-stabilized apartments.

Still, the state's older rental regulations at least gave property owners a little wiggle room. They were, for instance, allowed to "deregulate" their rent-stabilized units—meaning the rent-stabilization law would cease to apply—when they were occupied by tenants earning over $200,000 a year and allowable rent increases had pushed rents above $2,774 a month.

Even with this provision, the rent stabilization law was showering a disproportionate share of its benefits on wealthier tenants.

A June Wall Street Journal analysis found that the difference between rents at rent-stabilized units and market-rate buildings were far larger in wealthier Manhattan than in the poorer outer boroughs. The same article found that renters in the city's top income quartile were paying 39 percent less on average to live in rent-stabilized buildings compared to their peers in market-rate apartments. Meanwhile, rent-stabilized tenants in the city's bottom income quartile were paying only 15 percent less than their peers in unregulated units, according to the Journal.

In 2019, state lawmakers eliminated landlords' ability to deregulate those higher-priced units occupied by well-off tenants. This years' changes also made it more difficult for landlords to take their properties off the rental market.

Skewing the law even more in favor of wealthy tenants, argues Monday's lawsuit, makes a badly constructed law an even worse means of helping poor tenants. Limiting landlords' ability to remove rent-stabilized units from the rental market, the plaintiffs add, "tightly restricts owners' ability to demolish and rebuild their own buildings to provide additional capacity," which also negatively affects supply.

Both changes, the RSA and CHIP argue, effectively take away landlords' property rights without compensating them or furthering any legitimate government interest. The two groups are asking the court to immediately stop the state from enforcing its rent stabilization law, as doing so "will result in increased development of rental properties, better housing for a larger universe of renters, [and] the amelioration of a constrained housing market."

Chris Kieser, an attorney with the libertarian Pacific Legal Foundation, says that courts have proven resistant to claims that regulations can amount to a government taking of private property so long as the owner is still able to make a "reasonable return."

A 2008 lawsuit targeting New York's rent stabilization law as an unconstitutional property rights violation was rejected by a federal appeals court.

Tenant advocates speaking to The New York Times stressed that landlords were still making money under the state's regulations. "Landlords' profits are exorbitant if they are willing to waste their money on frivolous litigation such as this," Judith Goldiner, head of the Legal Aid Society's civil law reform unit, told the Times.

Kieser says that RSA and CHIP's claim that New York's rent stabilization law is irrational might stand a better chance of success, telling Reason "the irrationality argument could be a good way to go because almost no economist thinks [rent control] is a good idea. It doesn't help the people it's intended to help."

While declining to make a prediction on how federal courts might rule, Kieser described the lawsuit against New York's rental regulations as "a worthwhile fight" against a policy that's proven so destructive to property rights.

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35 responses to “New York Passed Sweeping, Progressive Rental Regulations. Now It's Getting Sued.

  1. The worst landlord in NYC is NYC.

    NYCHA fails to keep buildings up to code, fails to provide heat and hot water, fails to provider basic repairs.

    1. TrickyVic, don’t you live in Manhattan?

      1. Guess Shikha turned you down. Poor kid.

      2. I did. Queens for the last 8 years.

    2. The appropriate question to ask, is why is the NYC government in the landlord business, and competing with people trying to make a living via housing in the free market?

      Government mismanages business, and it uses force to harm people (i.e., first by taking their money, and second when it prosecutes, fines, and jails people, preferably criminals who hurt others, but often just people who piss off government employees or break some arcane rule).

  2. Don’t want the commissars expropriating “your” property, don’t be setting up shop in a People’s Republic. It’s not like they haven’t been giving you warnings for the past 75 years or so.

  3. “Landlords’ profits are exorbitant if they are willing to waste their money on frivolous litigation such as this,” Judith Goldiner, head of the Legal Aid Society’s civil law reform unit, told the Times.

    “If landlords can still afford to sue then obviously the law isn’t infringing upon their so-called rights!”

    1. No, they might be perfectly willing to spend money suing over this law if they are loosing money by the bucket load with no way to legally stop the bleeding.

    2. I am crazy or is she basically arguing for a Catch-22 in which people have no rights? If you can afford to sue, you’re rights are being violated. The only time your rights are violated is when you can’t sue to defend them.

  4. God I hate the politics of NYC, but I still can’t shake my love for the city either. I grew up an hour or so north of the city in the 70’s and I remember the shitty times, as well as the transformation of the city with Giuliani as mayor (say what you want about him, the net effect for most people in NY was very positive).
    Even with its liberal politics, there has always been an industry and vitality to this city. And it just pisses me off that these idiots continue to drive the greatest city in the US into the ground.

    1. I agree about Giuliani. I visited NYC many times pre and post Giuliani. Dude really cleaned it up. Love NYC. Just love it.

      It’s really too bad it’s not being served right.

  5. Democrats. Feh.

  6. Tenant advocates speaking to The New York Times stressed that landlords were still making money under the state’s regulations.

    So the regulations were a failure?

    1. “Under my proposed $5.45 minimum wage reduction, workers will still be making money…”

  7. AOC is a communist.

    Post it everywhere.

    1. /whistles.

      White supremacist!

      /waves red flag.

      AOC isn’t just a commie. She’s a commiecunt.

  8. Tenant advocates speaking to The New York Times stressed that landlords were still making money under the state’s regulations. “Landlords’ profits are exorbitant if they are willing to waste their money on frivolous litigation such as this,” Judith Goldiner, head of the Legal Aid Society’s civil law reform unit, told the Times.

    “If she drowns dead, she’s innocent; if she floats, she’s a witch and needs to be killed.”

  9. The oligarchs solution to everything: let markets take care of it! And make sure that building next door doesn’t get too tall to block my central park west view!

    1. The oligarchs solution to everything: let marketsmy Democratic politicians take care of it! And make sure that building next door doesn’t get too tall to block my central park west view!

      FTFY

  10. Why has nobody been able to explain this to the people of NY (or any other large city)?

    If you want affordable rent, you gotta increase the supply. And if you want to increase the supply, all you gotta do is remove the restrictions preventing developers from building fancy new expensive apartments for the rich.

    Why? Well, imagine that NYC suddenly let developers tear down buildings and put up new housing without any set asides for “low income housing”. What would happen? They’d build a quarter million new apartments for the rich in the first year, that’s what.

    So, how does this benefit low income housing? Well, all of those people who are paying $75k per month to live in a 30 year old apartment in lower Manhattan will move into the fancy new ones. And then the people who are paying $15k per month to live in a 120 year old apartment in midtown will move into those now-old and less desirable 30 year old apartments.

    And so on down the line.

    You let developers put up new buildings without a bunch of restrictions, and “housing for the poor” will take care of itself. Sure, there probably won’t be section 8 housing anywhere on lower Manhattan, but there will be plenty of it. And you’d probably get twice as many people on the island. Maybe more.

    What no politician seems to be able to explain to the people of these cities is that rent controls and other restrictions are downstream of the protectionist policies in place for the benefit of the existing owners of real estate. Because if you open up development in NYC, a bunch of million dollar apartments are suddenly going to be worth a tiny fraction of their current value. At some point that 600 sq foot 1920’s era apartment isn’t going to be a 7 figure investment, not in a world where 3,000 sq ft apartments are coming on line to the tune of 50k units per month.

    And that is who is really keeping your rent too high, NY. The people who bought a condo at crazy high prices and doesn’t want to lose that equity when the government-created bubble bursts.

    1. Supply and Demand.
      Not just a good idea.
      It’s “The Law”

  11. This is pretty odious stuff.

    Pretty soon they’ll be telling merchants they can’t fire employees (which is pretty much the case in places like France and Italy and their restrictive labour laws), what to sell and at what price.

    Laugh.

    But with the Democrats pulling far left anything is possible.

    Illiberal psychos.

  12. “…courts have proven resistant to claims that regulations can amount to a government taking of private property so long as the owner is still able to make a “reasonable return.””

    It’s not takeing-takeing!

  13. So “progressive” now means, unreasonable, idiotic, economically illiterate, anti-freedom, statist/Maoist asshole.
    How is this progress, I ask you?

  14. What the proggies doesn’t get is rent control doesn’t affect the rich.
    But then again, only the rich can live in Manhattan.

    1. “”But then again, only the rich can live in Manhattan.”‘

      You might be surprised how many people will fit in one studio apartment for the purpose of pooling their money to pay the rent.

  15. “Landlords’ profits are exorbitant if they are willing to waste their money on frivolous litigation such as this,”

    Another one added to the helicopter tour list.

  16. This policies in new york updated for rental regulations and this is sometime a need to do for the peoples. I am share with https://techopress.com/whatsapp-status-about-life/ for awareness.

    1. Keep it real, Gilly.

  17. All because of interests, it is the power holders who play an important role and can create this policy. situs qq online

  18. When my daughter was a two-year intern at a leading Manhattan investment bank, she and three other girls with shiny new master’s diplomas shared a small 6th floor apartment in an older walk-up for about $3,500 monthly. Ten years later, she had her own one-bedroom apartment in San Francisco for about $3,500. Both cities suffer with severe rent control.

    A few minutes of research revealed that 11 states don’t have rent control and another 35 states prohibit or preempt rent control. Ironically, the other five are out of control. Predictably, those states are California, District of Columbia, Maryland, New Jersey and New York. Let’s face it, the notion of rent control is anathema to a constitutional republic.

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