US Supreme Court won't hear challenge to rent stabilization laws

By John Kruzel

WASHINGTON (Reuters) -The U.S. Supreme Court on Tuesday turned away a bid by landlords to challenge rent stabilization laws in New York City that cap rent hikes and make it harder to evict tenants.

The justices declined to hear appeals by property owners and industry groups of lower court rulings that found the price and eviction controls did 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 evict tenants.

The law, which was passed by 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 New York City. A city government panel each year decides the percentage increase landlords can charge for rent-stabilized units.

According to proponents, rent stabilization measures protect communities by reducing tenant dislocation and homelessness, and by allowing residents to have long-term homes in a neighborhood.

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.

The Manhattan-based 2nd U.S. Circuit Court of Appeals rejected that constitutional challenge in several recent rulings, 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.

(Reporting by John Kruzel; Editing by Will Dunham)