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The Buckeye Institute and I have submitted to the US Supreme Court an amicus curiae brief urging the court to review the constitutionality of 2019 amendments to New York’s Rent Stabilization Law. That law further tightened the wall-to-wall restrictions, by among other things removing the provisions for vacancy decontrol when rents reached a certain level, last set at $2,774.76, and eliminating landlords’ previous option of raising rents by up to 20 percent between unrelated tenants. The challenge to that law in 74 Pinehurst LLC v. New York (2023) was brushed aside by a unanimous Court of Appeals for the Second Circuit on the basis of its view of established law.
That decision should be regarded as the next chapter of a self-inflicted tragedy that has cost the city and its citizenry billions of dollars in real economic growth. It is a progressive fantasy that price controls of this sort simply transfer wealth from greedy landlords to helpless tenants. The truth is otherwise.
The laws that mandate wealth transfers create a perverse set of incentives on both sides of the market. Potential developers are reluctant to invest in building or maintaining rental properties if their returns can be snatched away by legislative fiat. Current tenants, all local voters, will lobby for a system of price controls, from which they receive huge benefits, sufficient to fund their second homes in New England. Yet local tenants don’t care that everyone else—including new arrivals to the city—gets hurt when supply shrinks and quality of services declines because of insufficient revenues, thereby cutting needed tax revenues because of sagging property values. The administrative costs of running, or complying with, the city’s euphemistic Tenant Protection Laws add tens of millions.