United States: On Tuesday, the U.S. Supreme Court rejected a plea from landlord groups for a review of rent stabilization laws in New York City, restricting rent increases and proceedings to remove tenants.
The justices declined to hear appeals by property owners of lower court decisions that held that the city’s price and eviction controls do not infringe on the so-called taking clause in the Fifth Amendment to the US Constitution which does not allow the government to take property without compensation, as reported by Reuters.
Background on Rent Stabilization
The current rent stabilization law in New York City was passed in 1969, which aimed at controlling the hike of rents and restrictions on the right of eviction vested in landlords.
The law was enacted through the New York state legislation and through the city’s devising target structures built prior to 1974 that contain at least six units but reach in excess of 950,000 apartments and maybe up to approximately half of all rental apartments in the most populated cities within the United States.
The measures would ensure that communities are safeguarded as far as tenant displacement and homelessness are concerned since they would be given an opportunity to own homes in the neighborhood.
Support for Rent Control
Selendy Gay, a law firm that represents some of the parties defending the law, stated that rent stabilization measures ‘‘shelter tenants from rent shocks and arbitrary evictions, but deliver reasonable returns, enable landlords to reclaim possession of premises from unsatisfactory tenants or exit the rental market in various ways.’’
New York’s law was passed in 2019 with the intent of broadening the tenure security for renters. However, it has brought legal action by landlords and business associations who want higher rates of returns on investments and enhanced ownership rights.
Landlords’ Arguments Against the Law
One group of challengers, led by G-Max Management, said the new law “transforms a temporary rent regulation system into a permanent expropriation of vast swaths of private real estate, without just compensation, in the name of ‘affordable housing.'”
Previous Legal Challenges
A three-judge panel of the Manhattan-based 2nd U.S. Circuit Court of Appeals threw out two challenges in related rulings in March, and appeals were made to the Supreme Court.
The term takings clause underlines that private property shall not be taken for public use without compensation.
Opponents of rent stabilization laws have claimed that their ‘takings clause’ claim is backed up by a Supreme Court ruling in 2021. In that case, the justices said that the regulation of California, which permits union organizers to enter agricultural properties without the sanction of the employer, was equivalent to taking the property for public use and used without any compensation, which is in dissonance with the Fifth Amendment, as reported by Reuters.
In February, the Supreme Court dismissed a similar challenge to New York City rent stabilization laws by landlords.