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Landlord Groups Plan To Sue Over New Rent Laws in Federal Court

New York Gov. Andrew Cuomo

The outraged real estate industry isn’t giving up its fight against the state’s new rent-regulation laws, with two landlord groups now planning to try and overturn them in federal court.

The Rent Stabilization Association and the Community Housing Improvement Program are aiming to file a lawsuit by mid-July in New York federal court, the New York Post reports.

They will be arguing that the laws are unconstitutional because they infringe on owners' right against the “unlawful taking of property,” per the Post. It's not yet clear if Gov. Andrew Cuomo will be a defendant.

The Housing Stability and Tenant Protection Act of 2019, which passed this month, drastically alters the way landlords and property owners are able to raise rents and remove apartments from rent stabilization.

Now, landlords will no longer be able to use the vacancy bonus, a provision that had allowed them to increase rents by as much as 20% when a unit became vacant. Property owners who provided a preferential rent — a rent lower than they can legally charge — will not be allowed to increase the rent to the full price when leases are renewed.

The Major Capital Improvement and Individual Apartment Improvements programs, which had permitted landlords to pass on the costs of building improvements in rent, have been significantly reduced.

While tenant advocates have cheered the laws, real estate industry professionals are incensed by the legislation — arguing it will damage their businesses and encourage landlords to allow buildings to fall into disrepair.

"It’s very troubling. I made investments in good faith and I am being penalized for making those investments,” Taconic Investment Partners co-CEO Charles Bendit told Bisnow earlier this month. “I thought the legislature and government would come to a more balanced solution.”