Federal Court Upholds New York’s Rent Stabilization Law; Plaintiffs Plan Appeal to Supreme Court

The Second U.S. Circuit Court of Appeals on February 6 affirmed New York’s decades-old rent stabilization law, striking down lawsuits against New York City and the state filed by landlord trade groups and property owners. The plaintiffs had argued that the law violated the Fifth Amendment’s “takings clause,” which governs property seizures, as well as the Fourth Amendment’s due process clause. Tenant advocates, including NLIHC, filed an amicus brief defending the law as necessary to provide basic tenant protections and to ensure state and local legislative bodies retain their authority to regulate the housing market. The plaintiffs now plan to appeal the case to the U.S. Supreme Court. If  accepted by the Supreme Court, the case could not only impact New York’s law but result in a broader judgement concerning rent control and its impacts.

New York first enacted rent stabilization in 1969 and has amended and expanded its law over the years, most recently with the “Housing Stability and Tenant Protection Act of 2019” (see Memo 7/01/19). The 2019 amendment increased tenant protections and removed incentives for property owners to push out tenants in order to raise rents, which landlords say has caused tens of thousands of rent-stabilized units to sit empty. A total of five cases related to the 2019 reforms have gone through the federal courts, with three still awaiting federal appeals court decisions. The Second Circuit Court of Appeals ruling cited prior court decisions, including U.S. Supreme Court precedent, to strike down the arguments in the lawsuits.

In the amicus brief, NLIHC and other partners argued that housing policies must protect renters and bring balance to the landlord-tenant relationship. They also argued that rent stabilization laws are a critical part of a broad framework to protect tenants from exploitive rental schemes and address public health, safety, and welfare crises. They noted that the rent stabilization law in question addresses systemic racism in the housing market, provides protections against climate disasters, keeps rent affordable to low-wage workers, helps regulate institutional investors, and kept renters stable during the COVID-19 pandemic. Nearly one year after the case was argued, tenant advocates were pleased to see the law upheld.

“As we have advised policy makers time and again, New York’s Rent Stabilization statute provides vital protection for tenants, and without it, many would lose their homes through eviction and an inability to afford excessive rent increases,” said Shelly Nortz, deputy executive director for policy at Coalition for the Homeless, an NLIHC state partner.

Advocates will watch to see whether the Supreme Court, which has declined to take up other cases concerning rent stabilization in the past, will add the case to its docket. If not, the appeals court ruling will stand as the final judgement on the issue.