Landlords sue over rent freeze on New York City stabilized units
Herrick partner, Scott E. Mollen, was quoted in HousingWire discussing the legal challenges that landlords are pursuing in response to the NYC Rent Guidelines Board's decision to freeze rents for approximately one million rent-stabilized apartments.
The article noted that the first lawsuit brought by landlords targeted "a 2019 statewide law that closed a loophole allowed landlords to remove units from stabilization if they made substantial renovations. Landlords have struggled with higher construction costs like everyone else. Landlords have chosen to leave units empty rather than renovating them for new tenants."
"Today’s housing shortage is driving rents up for market-rate housing, and revenue-challenged landlords cannot make improvements that would benefit stabilized tenants," Scott said.
Scott said recent sales of stabilized apartment buildings at prices 30% to 50% below what sellers originally paid present the clearest evidence that many landlords are losing money. He added that loan portfolios have also sold below face value, wiping out landlord equity.
The article highlighted that in the most recent lawsuit, "landlords are asking the court to annul the freeze, declare the board’s decision unlawful and send the matter back for a new determination that weighs the statutory factors they say were ignored. They’ve also requested expedited discovery and an evidentiary hearing to examine how the board reached its decision."
On the latest lawsuit, Scott said former Mayor Ed Koch’s administration never applied pressure to the Rent Guidelines Board, which he formerly chaired, to reach a particular conclusion.
"The results were based on objective financial analyses, as required by the law," he said.
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