NYC landlords sue over rent law as vacant units climb

"The nonprofit public interest law firm Institute for Justice, working with the landlords, is not challenging rent stabilization for existing tenants. Instead, it is challenging restrictions on charging market rent when leasing a vacant, renovated apartment to a new tenant. A favorable ruling could send a message to other large cities with rent stabilization laws to avoid following New York's model."

"Los Angeles, San Francisco, and Washington, D.C., are among the largest rent stabilization. Rent stabilization typically applies to apartments built in the 1970s, but can also apply to new apartments under certain conditions. In L.A., for example, rent stabilization applies to newly built apartments if a developer replaces a rent-stabilized building. L.A. and other cities with rent stabilization have not seen many landlords warehousing empty units. Landlords there can raise rents enough to recover renovation costs."

"A group of New York City landlords sued, arguing that the law sets rents too low to justify spending thousands of dollars renovating apartments for new tenants. Housing advocates have long argued that landlords exploit the substantial remodel exemption in the law to sidestep rent stabilization. Their real goal is often to reset rents to market-rate levels on previously stabilized units, critics argue. In 2019, New York closed similar loopholes to make housing more affordable and available."

Zohran Mamdani campaigned to expand rent stabilization and will inherit a lawsuit challenging New York's rent stabilization rules when he becomes mayor. A coalition of landlords, supported by the Institute for Justice, argues that limits on charging market rents for vacant, renovated units make renovations uneconomic. A favorable court ruling could prompt other large cities with rent stabilization to change policies. Cities such as Los Angeles, San Francisco, and Washington, D.C., have different implementations; L.A. applies stabilization to newly built units when a developer replaces an existing rent-stabilized building. Critics say landlords exploit substantial remodel exemptions to reset rents, and 2019 reforms capped renewals and vacancy increases between 3% and 4.5%, a change linked to increased vacancies.

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