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Landlord Groups Hope Supreme Court Takes Up Rent Stabilization Law

New York City

Landlord groups that railed against the slate of rent regulation reforms New York state passed in 2019 are hoping a shift to the right at the nation’s highest court will help them in their quest to have the legislation declared unconstitutional.

Two lobbying groups, Rent Stabilization Association and the Community Housing Improvement Program, filed lawsuits in the wake of the laws' passage, challenging their constitutionality. After initially having their claims batted down, they are now waiting for the Second Circuit Court of Appeals to hand down a decision, the Real Deal reports. The groups argue the laws amount to the illegal taking of private property and a violation of their due process rights.

Right now, it seems likely the case will be knocked back by the Second Circuit, too, but the groups are fine with that — they plan to take the matter all the way to the Supreme Court, per TRD.

The court’s 6-3 conservative majority, which earlier this year struck down the federal right to abortion and New York’s gun laws, has apparently given CHIP and RSA hope that the Supreme Court will take a different view than the lower courts. Andrew Pincus, a partner at Mayer Brown and the lead attorney for CHIP and RSA, told the publication his clients’ case is strong and he feels confident moving forward. The Supreme Court only agrees to hear as many as 150 cases of the 7,000 cases presented to it annually for review, according to its website.

Under laws introduced in 2019, landlords stopped being able to use what was called a vacancy bonus, a provision that had allowed them to increase rents by as much as 20% when a unit became vacant. Property owners that provided a preferential rent — a rent beneath what they could legally charge — were no longer allowed to increase the rent to the full price when leases were renewed.

The Major Capital Improvement and Individual Apartment Improvements programs, which had provided a way for landlords to pass on the costs of building improvements in rent, were also reduced. Real estate players say it has made  the housing crisis worse because landlords are disincentivized from improving their buildings.

As a result, many owners of rent-stabilized apartments have simply let them sit vacant. A state housing agency memo reported by The City Wednesday showed there were more than 60,000 rent-stabilized units in the city that were kept vacant in 2021, a practice tenant groups refer to as “warehousing.”

That figure doubled from a year earlier. Tenant advocates have accused landlords of engaging in warehousing to either create a false unit scarcity to push their legislative agenda in Albany or hold out until a potential Supreme Court ruling.