Supreme Court Upholds New York Rent Control Law; Justice Clarence Thomas Offers Hope to Free Market Advocates

The Supreme Court has upheld New York’s rent control laws but left the door open to reviewing the constitutionality of such regimes at a future time.
Supreme Court Upholds New York Rent Control Law; Justice Clarence Thomas Offers Hope to Free Market Advocates
An apartment complex is seen with the Empire State Building in the background in New York City, on Oct. 18, 2006. (Mario Tama/Getty Images)
Tom Ozimek
2/20/2024
Updated:
2/21/2024
0:00

The U.S. Supreme Court has refused to strike down New York’s rent control system, although an opinion issued by Justice Clarence Thomas raises hopes that the high court might revisit the issue at a later date and eventually side with free market advocates.

The Supreme Court on Feb. 20 turned away two legal challenges by rental property owners to New York’s decades-old rent stabilization regime that one of the appeal petitions called “the most sweeping and onerous rent control provisions the United States has ever seen.”
Justice Thomas, an appointee of George H. W. Bush, issued a brief statement in which he said the matter of rent stabilization laws, or RSL, is worthy of the high court’s consideration but not from the vantage point of the current appeal requests.

“The constitutionality of regimes like New York City’s is an important and pressing question,” Justice Thomas wrote. “In an appropriate future case, we should grant certiorari to address this important question.”

He hinted that the high court would be open to hearing the landlords’ appeal in a different, future lawsuit, provided it was more specific to New York’s rent control regime and its impact on property rights.

“The petitioners’ complaints primarily contain generalized allegations about their circumstances and injuries,” Justice Thomas wrote. “But to evaluate their as-applied challenges, we must consider whether specific New York City regulations prevent petitioners from evicting actual tenants for particular reasons.”

A potential future win by landlords could set off a chain reaction nationwide, inviting legal challenges to other rent control laws in place across the country while delivering a blow to advocates of rent control regimes.

Rent Control Regime in Focus

The appeals that the Supreme Court denied on Feb. 20 stemmed from the rewriting of New York’s rent control rules in 2019, making changes that many tenants considered a blessing but landlords saw as a curse.
New York’s rent control laws have wiped out an estimated $75 billion of the value of rent-stabilized units, according to Maverick Real Estate Partners, a New York investment manager, per Bloomberg.

Landlord Lewis Barbanel, owner of Barberry Rose Management Inc. in Woodmere, New York, told Bloomberg that tighter rent control rules violate private property rights and discourage renovation and construction, worsening the housing shortage.

“The politicians are defunding these buildings,” he told the outlet. “They’re trying to create a situation where the owners fail.”

Cea Weaver, campaign coordinator of Housing Justice for All, an organization that advocates for New York’s rent control laws, issued a statement in support of the Supreme Court decision not to take up the landlord appeals.

“Today the United States Supreme Court has confirmed what we’ve known all along: rent stabilization is here to stay,” she said in a statement.

“For decades, New York’s rent stabilization system has kept hundreds of thousands of New Yorkers in their homes, even as market pressures increase.”

Economists argue that rent control distorts markets, leading to housing shortages and increasing rents in buildings that aren’t subject to regulatory rent caps.

Some lawmakers see rent control as part of a fight to use government power to flatten hierarchies and equalize outcomes.

Rent control is a cornerstone of affordable housing in New York, protecting over a million households from exorbitant rent hikes. I’m grateful SCOTUS has rejected a challenge to rent control, keeping this essential tool for fighting inequality intact,” Rep. Jerry Nadler (D-N.Y.) said in a post on social media platform X, formerly known as Twitter.

‘Per Se Taking’

In his Feb. 20 statement, Justice Thomas wrote that different pleadings by the petitioners before lower courts “complicate” the ability of the Supreme Court to carry out an adequate review of the rent-control regime from the vantage point of the two cases before the high court: 74 Pinehurst LLC v. New York and 335-7 LLC v. City of New York.

Under New York’s revamped RSL rules, owners of rent-stabilized apartments are not allowed to boost rents above a limit determined every year by a citywide oversight board. These landlords are generally required to extend a tenant’s lease except in certain situations, such as when a tenant falls behind in paying rent.

The petitioners argued that the 2019 amendments amounted to regulatory takings because they depressed property values and blocked ways that landlords could charge market rents.

But lower courts rejected these arguments, prompting the plaintiffs in both cases to file petitions before the Supreme Court.

Justice Thomas noted in his statement that the petitioners argued that New York’s rent control regime represented a “per se taking,” which in jurisprudence is the idea that land owners are forced to endure a permanent physical occupation on their property.

“Among other things, they argue that New York City’s regulations grant tenants and their successors an indefinite, infinitely renewable lease terminable only for reasons outside of the landlord’s control,” he wrote.

Associate Justice Clarence Thomas sits during a group photograph of the justices at the Supreme Court in Washington on April 23, 2021. (Erin Schaff/Pool/AFP via Getty Images)
Associate Justice Clarence Thomas sits during a group photograph of the justices at the Supreme Court in Washington on April 23, 2021. (Erin Schaff/Pool/AFP via Getty Images)

Justice Thomas noted that appeals courts have taken different approaches, in one case rejecting the petitioners’ claims while in another accepting them.

He said that the Supreme Court needs a clearer understanding of how New York City regulations “coordinate to completely bar landlords from evicting tenants” and that the petitioner’s pleadings in the current cases “do not facilitate such an understanding,” which is why he recommended that the matter should be granted high court review in an “appropriate future case.”

Some attorneys see Justice Thomas’s opinion as a sign that the Supreme Court is keen to weigh in on the constitutionality of rent control.

“This is, at best, a temporary reprieve, because conservative justices have pointedly asked for landlords to try again,” attorney Daniel Suitor wrote in a post on X, referring to the Supreme Court’s decision not to grant review in the two cases.

Matthew Paletz, a landlord advocate who owns one of the larger landlord-tenant law firms in the Midwest, said rent controls would worsen the housing shortage.

“Rent control, though politically fashionable, will not solve but exacerbate the problem,” he told The Epoch Times in an earlier interview.

“All you’re going to do is drive out those who are the housing operators and then disincentivize those who are currently putting off making improvements to their properties because of the overwhelming costs it takes to do so.

“Rent control has never worked. There’s not one tangible example that has shown rent control to be successful. Not one. Groceries are more expensive than ever and people can’t afford them. Why aren’t there controls on food pricing?”    

Mark Gilman contributed to this report.