The Case Against Rent Stabilization


The Supreme Court is “taking a surprisingly serious look” at New York’s rent regulation laws, according to a story in the Journal outlining the legal precedents that a Manhattan couple are using to challenge the regulations and how the city and New York AG are defending stabilization. The back story: “James and Jeanne Harmon, the owners of an Upper West Side brownstone, are waging an underdog constitutional battle against rent rules forcing them to subsidize their tenants — including Nancy Wing Lombardi, an executive who pays about $1,000 a month for a one-bedroom unit and also owns a house in the Hamptons.” The Harmons say rent stabilization violates the “Fifth Amendment, which says the government can’t take private property for public use without just compensation.” The city and state argue that stabilization doesn’t actually constitute taking based on an earlier ruling that found that if you’ve already allowed tenants, “taking” isn’t involved. The Harmons are also making a due process claim: “arguing that the high court established 90 years ago that rent controls can’t be permanent but only a temporary response to a ‘catastrophic’ emergency. That, they say, was the upshot of a 1922 ruling, the last time the high court looked at the constitutionality of New York City’s rent controls.” And, finally, the couple is arguing that rent regulations are a “racket in which property owners and market rate tenants always lose,” but the state is countering that this sort of argument about policy aren’t relevant to the legality of the regulations.
The Legal War Over NYC’s Rent Regulations [WSJ]
Photo by shinsawbu

58 Comment

  • Please, Supreme Court, abolish rent regulation!

  • Please, Supreme Court, abolish rent regulation!

  • My legal mind is excited about this case. Can’t wait to see what the Justices have to say about this line of argument. Over the years I’ve heard/read many arguments against rent stabilization, but never a Fifth Amendment attack. This should prove interesting. I want to read their legal briefs to see just how they tailored the argument.

  • Should be spirited. Please keep us posted Brownie.

    WSJ poll 82.7% in favor of ending rent control/stabilization laws….

    • Sounds like about the same % of the populace that is totally screwed by them.

      If you want to subsidize housing, do it with a welfare check – if not – don’t do it at all. Rent stabilization is the worst possible way to get people affordable housing – from a market distortion perspective, at least.

    • Sounds like about the same % of the populace that is totally screwed by them.

      If you want to subsidize housing, do it with a welfare check – if not – don’t do it at all. Rent stabilization is the worst possible way to get people affordable housing – from a market distortion perspective, at least.

    • Really not surprised that WSJ readers are against rent stabilization. Kind of asking if Republicans favor abortion or not.

  • I hope they win. I agree also, get rid of all rent regulation.

  • The rent regulation laws in NYC do seem peculiar. It will be interesting to see what the Supremes say if they actually decide to hear the case.
    It does seem odd to me to be compelled by the government to subsidize someone’s rent in Manhattan who owns luxury vacation property in the Hamptons. Nutty.

  • Being pretty lefty all my life, but also a sole proprietor and now homeowner, I am surprising myself with my support for the plaintiffs. As brutal as the market is for everyone, in both good times (for renters and buyers) and bad times (for sellers), it is the best mechanism to allocate value.

  • buy regulated building, with current rent law serving to discount the transaction massively below market. bring lawsuit to change law. sell unregulated building at market. pocket difference. god bless america.

    • Your cynicism is grounded in reality and is a good point, but for rent regulation be fair on BOTH sides, then there has to be some sort of oversight/control over who lives in these apts.

      If you argue that to lose all regulated apts would be a huge social dis-service to the very many NYers who wouldn’t be able to live in this city at current rates (a sentiment I agree with in part) – then you should be able to make sure that the regulated apt goes to a needy NYer.

      In the case above – the renter purchased a $320K second home in the Hamptons back in 2001 – I can think of no clearer example of a renter who no longer needs one of these much needed and sought after apts.

      In this specific example there is no greater social good being served by the Hamptons owner paying so little to live in Manhattan – its just a perk enjoyed by a person who’s living quite well. Why not give her WIC, an EBT card and a welfare check every month as well?

  • The likelihood of anything significant coming out of this case (or any other) is slim at best.

    • I think there is a good chance that a major change will come out of this. This is the first time this case has been brought up in front of the supreme court. All previous cases against rs/rc where in front of NY based courts. The supreme court (unlike the NY courts) does not have any bias for rc/rs. Additionally, one of the judges on the supreme court is from NY and has voiced an opinion against rs/rc.
      This should be very interesting indeed. Please keep on top of this story brownstoner….

      • Actually, four justices on the Supreme Court grew up in NYC, and I’m pretty sure they will go along with the NYS Court of Appeals’ finding that “government regulation of the rental relationship does not constitute a physical taking.”

        • I stand corrected. However, why are you pretty sure that they will go along with the NYS Court of Appeals?

          • I am, on that point (read the arguments and opinions), but there are several other grounds in this suit that were not addressed at the state – i.e, the claim to a lack of due process. However, I’d be amazed if any of that stuck – pretty stunned the court is even considering this case. Must have nothing else to do.

      • if RS is a “racket where landlords and market-rate tenants always lose” why aren’t market rate tenants marching in the streets so everyone pays market? Nice try though.

        no, the problem here is landlords can’t help killing the golden goose. so you end up with a poor shmo like Harmon paying for the sins of much bigger shmos.

        henry george, man.

      • if RS is a “racket where landlords and market-rate tenants always lose” why aren’t market rate tenants marching in the streets so everyone pays market? Nice try though.

        no, the problem here is landlords can’t help killing the golden goose. so you end up with a poor shmo like Harmon paying for the sins of much bigger shmos.

        henry george, man.

  • I i think if the city cares so much about the rent laws and still wants us landlords to pay high realstate taxs the should pay the deffrents on the rent stabilzation apts for examlpe a 2bed room in carroll gardens goes for 2400 a month and you have a tenent paying 400 the city should give the landlord the other 2000 and every one is happy

  • the city should house all the rent contral tentents and see if the like colecting 250 a month fro a 2 bedroom this city is sick they need to change the laws soon

  • the city pay part on all sec 8 why not pay the deffrents on rent contro; and rent stablize so the landlord can pay there bills its funny the rc tent is having a partner

  • us landlords are loosing out owning a building is a bis and we live of it why is the city hurting us just build offtible housing for these people and put htem all ther and the city deal with them

  • Classiejoe’s posts make my eyes hurt.

    • Because no normal person makes spelling and grammar mistakes like you do.

    • Because no normal person makes spelling and grammar mistakes like you do.

    • Because it seems that you can’t spell or type, classiejoe.

      Here are your posts quickly corrected for spelling, grammar and punctuation:

      - – - – - – - – -
      I think if the city cares so much about the rent laws and still wants us landlords to pay high real estate taxes, the city should pay the difference on the rent stabilization apartments. For example, a 2-bedroom in Carroll Gardens goes for $2400/month. If you have a tenant paying only $400, the city should give the landlord the other $2000 and everyone is happy.
      - – - – - – - – -
      The city should house all of the rent control tenants and see how it likes collecting $250/month from a 2-bedroom apartment. This city is sick. They need to change the laws soon.
      - – - – - – - – -
      The city pays part of all Section 8 — why can’t it pay the difference on rent controlled and/or rent stabilized apartments? That way the landlord could pay their bills. It’s funny: the rent control tenant has a partner.
      - – - – - – - – -
      We landlords are losing out. Owning a building is a business and we live off it. Why is the city hurting us? Just build affordable housing for these people, put them all there and let the city deal with them.
      - – - – - – - – -
      Why? Because I am right?

  • classie (or not), you bought the building knowing full well what it was. I am not for RS but it’s not like it was forced on you after the fact. So, any bad bis is your own making.

  • thats ok iam not that good with a comupter but iam a landlord that makes money thats what counts buddy

  • Well, despite his lack of spelling skills, he already owns an income producing building. But the left wing elitists will focus solely on his shortcomings, not on what he has achieved.

  • But I’d still like an explanation of why he thinks he should get more given the fact that he bought the buildings knowing full well what the problems were. I think this exhibits a sense of entitlement similar to what the RC tenants have mastered.

  • I totally agree with means testing. WTF is Charlie Rangel doing with TWO????

  • I believe real estate taxes on apartment buildings are partially based on rent roll. Therefore if rents went up– so would real estate taxes and revenue of city.

    I don’t see how city is subsidizing r/s rent.

    why is there so much problem with r/s by the same people who never complain at all about city regulating taxi fares?

  • I believe real estate taxes on apartment buildings are partially based on rent roll. Therefore if rents went up– so would real estate taxes and revenue of city.

    I don’t see how city is subsidizing r/s rent.

    why is there so much problem with r/s by the same people who never complain at all about city regulating taxi fares?

  • Twenty years ago or so the Supreme Court found that the Board of Estimate, the city’s chief decision making body for over a hundred years, was unconstitutional and the city had to eliminate it. There is no more Board of Estimate. Prior to that it was the most important political body in the city. Its eternal permanence was just a matter of fact. People could not imagine a New York without a Board of Estimate. If someone had not brought the case to the Supreme Court we would still have it.

    • Funnily enough, it was found unconstitutional because Brooklyn didn’t have greater power on the board than did Staten Island (Fourteenth Amendment, Equal Protection, Reynolds v Sims). Result? All the Borough Presidents have no power at all and we’re controlled by Emperor Bloomberg and, to a lesser extent, by the City Council Not that I’d like Buffoon Markowitz to have any power to do anything, mind you.

    • Only two justices remain from 1989, when the Board of Estimate decision came down – Scalia (who was born in NJ but grew up in Queens) and Kennedy. The other three New Yorkers are Kagan, Sotomayor, and Bader-Ginsburg – all appointed by Democratic presidents and all more liberal-leaning.

  • if RS is a “racket where landlords and market-rate tenants always lose” why aren’t market rate tenants marching in the streets so everyone pays market? Nice try though.

    no, the problem here is landlords can’t help killing the golden goose. so you end up with a poor shmo like Harmon paying for the sins of much bigger shmos.

    henry george, man.

  • I THINK IN THIS DAY IN AGG THE CITY STILL THINK THAT SOME CAN PAY A LANDLORD 300 A MONTH THAT IS SICK

  • I was under the impression that RS and RC buildings get a property tax abatement. So Joe, besides paying less than market for your proerty, are you also paying the same property taxes as everyone else?

  • NO I PAY THE SAME TAXS AS EVERY ONE ELES WE DONT GET ANY BRAKES ON TAXS WITH RC OR RS

  • IAM JUST SAY IF THE CITY WANTS TO KEEP THESE LAWS THE SHOULD PAY US THE DEFFRENTS SO WE CAN GET MARKET RENT

  • 1) some newer buildings voluntarily enter into rent-stab program and get rent abatement. yes, voluntarily– so if r/s so horrible why would any landowner do this?

    2) you are free to build any apt building and not be subject to r/s. or buy one that is not r/s. So quit your crying if you chose freely to enter into a regulated business. Do you complain that yellow cab fares are regulated too?

  • I have to come down in favor of rent regs. Why? I am a landlord with market rate apts. if they abolish RR then I will not be able to command as much rent. Efficient markets are not my friend.

  • I have to come down in favor of rent regs. Why? I am a landlord with market rate apts. if they abolish RR then I will not be able to command as much rent. Efficient markets are not my friend.