By John Kruzel
WASHINGTON (Reuters) – The U.S. Supreme Court declined on Tuesday to hear a bid by landlord groups to challenge rent stabilization laws in New York City that cap rent hikes and make it harder to evict tenants.
The justices turned away appeals by property owners of lower court rulings that found the city’s price and eviction controls do not violate what is known as the “takings clause” of the U.S. Constitution’s Fifth Amendment, which bars the government from taking property without compensating owners.
New York City’s modern rent stabilization system, enacted in 1969, was designed to address a shortage of affordable housing by capping rent increases and curbing the authority of property owners to remove tenants.
The law, which was passed by the New York state legislature and is implemented by the city, generally applies to buildings constructed before 1974 with at least six units, covering nearly one million apartments – around half of all apartment rentals in the most populous U.S. city.
According to proponents, the housing measures protect communities by reducing tenant dislocation and homelessness, and by allowing residents to have long-term homes in a neighborhood.
The law firm Selendy Gay, which represents some of the parties defending the law, said rent stabilization measures “protect tenants against rent shocks and unjustified evictions, while allowing landlords to make reasonable returns, evict unsatisfactory tenants, or exit the rental market altogether through various means.”
The New York law was amended in 2019 to expand tenant protections, drawing legal challenges from landlords and trade associations seeking higher investment returns and more control over their property.
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.’”
The Manhattan-based 2nd U.S. Circuit Court of Appeals in related rulings in March rejected two challenges, prompting appeals to the Supreme Court.
The “takings clause” states that private property shall not be “taken for public use, without just compensation.”
Challengers to rent stabilization laws have said their “takings clause” argument is supported by a Supreme Court decision from 2021. In that case, the justices ruled that a California regulation allowing union organizers to enter agricultural properties without an employer’s consent was akin to the government taking private property for public use without just compensation in violation of the Fifth Amendment.
The Supreme Court in February turned away a similar challenge by landlords to New York City rent stabilization laws.