NYC’s Rent Control Law Survives Supreme Court Challenge

Owners contended that the regulations amount to an unconstitutional taking of property.

New York City’s controversial rent control laws will stay in place after Tuesday’s Supreme Court Ruling. Photo by Fotios Tsarouhis for MHN

New York City’s rent control law will stay in place for now. The U.S. Supreme Court on Tuesday declined to hear the latest challenge to the controversial regulations. However, the court appeared to remain open to future consideration of the key issues raised by the case.

In 74 Pinehurst et al. v. State of New York, the plaintiffs—owners of small New York City multifamily properties—had argued that New York City’s rent control regulation violated the Fifth Amendment’s Takings Clause, which prohibits takings of property without due process. The case is similar to one the court declined to hear last year.

Because the city’s Rent Stabilization Law allows residents to renew leases perpetually, regardless of the owner’s consent, the regulations take away owners’ rights to “exclude from their property and prevents them from living in their own apartments,” the plaintiffs argued.

Another issue raised in the case was whether conscripting private property for use as public housing stock, and reducing its value, amounts to a violation of the Takings Clause.

The Second Circuit’s ruling

The owners had asked the court to review a decision by the U.S. Court of Appeals for the Second Circuit. In February 2023, that court ruled that the case didn’t meet the standard for violating the Takings Clause. The court said that the owners had entered the market voluntarily and could still evict residents for breaching their leases. The Second Circuit also held that the rent control regulations served a purpose and did not deprive the owners entirely of their property’s value.

The plaintiffs argued that New York City’s law constituted an unconstitutional taking by preventing owners from terminating a lease at the end of a fixed term, “except on grounds outside the owner’s control.”

In a statement accompanying the decision declining to hear the appeal, Justice Clarence Thomas wrote that the “constitutionality of regimes like New York City’s is an important and pressing question.” He added that “in an appropriate future case, we should grant certiorari to address this important question.”

But, Thomas said, to evaluate the challenges to the city’s rent regulations, the court would need to consider whether specific regulations “prevent petitioners from evicting actual tenants for particular reasons,” as well as a “clear understanding of how New York City regulations coordinate to completely bar landlords from evicting tenants.”

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