Supreme Court Rejects NY Rent Law Challenge
As an increasing number of landlords face foreclosure or sell off their properties at a steep discount, the U.S. Supreme Court has dashed landlords’ hopes of finding relief from rent regulation policies.
The court on Monday declined to hear landlord groups’ challenge to New York’s rent law.
The Rent Stabilization Association, the Community Housing Improvement Program and a few individual landlords filed a petition in May, asking the court to consider arguments that the state’s rent stabilization represents an unlawful taking of property without just compensation.
The decision thwarts the hopes of struggling landlords and means relief, though not forthcoming, is likely up to state lawmakers.
The petition claims that landlords are forced to provide “public assistance” to tenants through low rents, lease renewals and succession rights. The city’s Rent Guideline Board, which determines annual rent increases for stabilized apartments, considers tenants’ ability to pay rent, which has led to “a widening gap between owner costs and regulated rents,” the petition states.
The groups claim that the rent law fails to actually address the state’s housing crisis while placing “the burden of rectifying a societal problem on a select minority of property owners.”
Extensive changes to the state’s rent law in 2019 further restricted how and when landlords can increase rent on stabilized apartments and when apartments can be taken back by the owner.
Landlords have blamed those changes for their inability to renovate apartments, which have sat vacant and dragged down rent revenue.
Foreclosure filings are on the rise as property owners struggle to pay off their debt, and high interest rates spell trouble for those with impending loan maturities.
The Supreme Court challenge was a long shot, given the court’s history of declining rent control cases and the fraction of cases that are heard each year.
Even the court’s conservative majority was not enough to push the case forward.
“While we were hopeful a broad facial challenge would have delivered the most relief to the most owners as quickly as possible, we remain convinced that the law is irrational and vulnerable to more specific challenges,” Jay Martin, CHIP’s executive director, said in a statement. “One way or another this law must go down, its current form is destroying New York’s housing.”
In a joint statement, CHIP and RSA said they view this decision as “a signal to bring more targeted challenges to specific provisions of the law illustrating direct impacts on housing providers.”
The landlords’ arguments rely on a 2021 decision by the high court in the case Cedar Point Nursery v. Hassid. In that case, the court found a California law unconstitutional because it required employers to allow union organizers onto their property for up to three hours.
The groups first filed their lawsuit in July 2019, intent on eventually bringing their claims before the Supreme Court. Lower courts rejected their arguments.
Other states were watching this case closely.
In an amicus curiae brief in support of the landlord groups, the California Business Roundtable cited California’s 2019 cap on rent control, pointing to Los Angeles and San Francisco as “some of the most burdensome rent-control regimes in the country.”
“Some of California’s largest cities … contain many of the same troubling features that petitioners challenge here—e.g., substantial restraints on a property owner’s ability to remove tenants, to reclaim units for personal use, to withdraw units from the market, and to charge fair-market rates,” the brief states.
