The city’s archaic system of rent regulation may be in need of rethinking, but it is just as well that the U.S. Supreme Court decided not to hear a legal challenge to the system. The issue is contentious enough without the distinguished justices getting involved and possibly imposing a top-down solution.
The case which the Court chose to ignore came about when the owners of an Upper West Side brownstone filed a lawsuit several years ago, arguing that rent-stabilization regulations constituted an illegal seizure of their property. The owners noted that three of the six rental apartments in their building are subject to rent-stabilization regulations. Rent increases are set not by the market but by the government, and tenants generally have the power to renew leases for as long as they wish.
The building owners noted that rents in the three regulated apartments were about $1,000 a month. The apartments would rent for more than double that sum in an unregulated market, according to the owners’ lawsuit.
The owners took their argument to the Supreme Court after a state Court of Appeals panel ruled that rent regulations did not constitute an illegal taking of property by the government in part because the owners were aware of the regulations when they bought the building. The panel also noted that the owners did have other options, including demolition (if, that is, they did not build new housing on the site).
In the real world, of course, owners actually have very few options. The Court of Appeals noted that owners have the option of evicting a troublesome tenant, but that process is about as cumbersome as firing an incompetent but tenured teacher.
The Supreme Court decided to let the Court of Appeals panel have the final decision. The Supremes traditionally do not comment on cases they choose to ignore, so it’s impossible to know their opinions.
If they simply decided it was better to stay away from landlord-tenant disputes in New York City, well, they probably made a wise decision. If this issue is ever to be resolved, it must be done through the political process, and not by fiat from Washington.