In a potentially monumental case that will have far-reaching implications for New York politics and the housing market, the Supreme Court is poised to strike down key aspects of the rent-control laws that have long shaped the city’s rental landscape. Local politicians have been quick to champion affordable housing initiatives, such as the City Council bill that would require landlords to cover broker fees for rental units, or the push for a statewide law that would extend rent control measures. However, this case has the potential to bring an end to this never-ending cycle by dismantling the core rent law, thereby resolving New York’s perpetual housing “crisis” and benefiting both tenants and landlords.
In May, landlord groups in New York requested that the court review their challenge to the state’s Rent Stabilization Law, which enables the city to limit rent increases and affords tenants a nearly guaranteed right to renew their leases. This has resulted in some individuals occupying the same rental unit for decades and passing it down to family members or caretakers. In numerous cases, building owners have been unable to regain control over these properties, even if they have intentions to use them for personal purposes. The lawsuit argues that this is an unconstitutional infringement on property rights, a violation of the Fifth Amendment.
For years, it seemed unlikely that this law, which dates back to 1969, could be overturned, despite the fact that it places the burden of providing affordable housing solely on landlords and essentially deprives them of their own property. When the suit was filed in 2019, both the US district court and the Second Circuit Court of Appeals dismissed it. However, recent Supreme Court decisions have signaled a greater emphasis on protecting property rights, with key cases emerging in favor of property owners with 6-3 votes. In 2021, the court struck down a longstanding California rule that mandated farms to grant access to union organizers, citing the right of private owners to exclude individuals from their property. The New York plaintiffs argue that requiring landlords to offer lease renewal at a city-mandated rent is a far more intrusive “taking” of property.
The plaintiffs contend that the Rent Stabilization Law has had a detrimental effect on both owners and tenants, stifling New York City’s housing market for over 50 years. This claim holds true as tenants who lucked into favorable rental agreements, even those who can afford to pay market rent, hold onto their units indefinitely, preventing those in greater need from accessing them. Empty nesters remain in larger units instead of downsizing, while larger families are faced with cramming into smaller accommodations or leaving the city altogether. Landlords, burdened by rent caps, are often unable to make necessary upgrades or repairs due to the financial constraints. Consequently, thousands of units remain vacant as landlords are unable to recoup sufficient income to bring them up to code.
The Supreme Court will make a decision on whether to take up this case as early as September 26th. Progressive legal commentators may dismiss the possibility of the justices striking down the rent control law, but it is worth noting that this high court has already overturned precedent, such as Roe v. Wade, and that six of its members have shown a strong commitment to protecting property rights. If the court chooses not to intervene, the city’s housing market is headed for disaster, as one in five landlords currently operate at a loss, and some may abandon their buildings altogether. However, if the justices remain steadfast in their principles, it could have dramatic implications for local politics and benefit the majority of renters and landlords alike by creating a more functional housing market. Ultimately, the outcome of this case holds significant weight for all stakeholders involved.
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