Rule of Law

Rent regulations are not unconstitutional

Some New York City landlords are pushing for an expansive misreading of the Constitution to serve their property interests.

Several landlords and landlord associations are attacking New York’s rent stabilization law — a law that protects tenants from having their rent increased by more than a certain rate each year and that limits the reasons why tenants can be evicted. Applying to approximately one million New York apartments, the law promotes neighborhood stability by allowing tenants to remain within their communities and near their workplace.

However, these landlords contend that the law violates, among other things, the Fifth Amendment to the U.S. Constitution, which bars the “taking” of “private property…for public use, without just compensation.” After a federal district court disagreed, they’re now trying their luck in the U.S. Court of Appeals for the Second Circuit. If that court follows the Constitution’s text and history, the landlords will lose there, too.

In fact, these landlords cannot show that the rent stabilization law takes their property under any test the court might apply. A few key questions help show why:

Has the rent stabilization law physically taken away the landlords’ property (as the state does, for example, when it takes property to build a road)? No, it has not. The landlords still own their property.

Does the rent stabilization law “compel the property owner to suffer a [permanent] physical ‘invasion’ ” or deny the owner “all economically beneficial or productive use of [his] land,” as courts would require for the landlords to win without the need for a detailed factual analysis? No, it does not. The landlords are still using their property to collect rents from tenants.

Does the rent stabilization law qualify as a taking under the Supreme Court’s multifactor balancing test established in Penn Central Transportation Co. vs. City of New York? No, it does not. None of the factors established in Penn Central — which look to the character of the regulation, whether it interferes with the owner’s expectations at the time of purchase, and whether it has a significant economic impact on the entire property — weigh in the landlords’ favor.

On point after point, the landlords’ attempt to overturn the rent stabilization law fails any test of what counts as a Fifth Amendment taking.

Their position contradicts not only the Constitution as it has been interpreted by the Supreme Court, but also the founding generation’s understanding of what the takings clause means. Numerous amicus briefs explain this in detail, including a brief against the landlords filed by the Constitutional Accountability Center (of which one of us is president), on behalf of 10 scholars of constitutional law, property law, sociology and urban history (including one of us, a professor of law).

The takings clause was originally, and properly, understood to apply only to direct appropriations of property by the government — physically taking property from its owner. As one scholar has explained, “the takings clause and its state counterparts originally protected property against physical seizures, but not against regulations affecting value,” and “the framers did not favor absolute protection of property rights.” The Supreme Court later held that the takings clause also applies to government actions that amount to kicking property owners off their land by allowing unfettered physical access, rendering the land completely worthless, or that otherwise “go too far.”

Let’s be clear: The government has not taken your property if you still own it, control it, and profit from it. The Constitution does not guarantee landlords the ability to leverage the power imbalance between landlord and tenant to maximize profits. The government can regulate private property to address a wide range of problems, including housing affordability and community stability.

Apparently, however, the landlords believe they have a receptive audience for their extraordinary claim in certain quarters of the judiciary. Reports indicate these landlords may even be looking past the Second Circuit and “have their sights on taking the suit to the Supreme Court, where they hope a new conservative majority will rule in their favor.” Should the landlords succeed, the entire rent stabilization law could be invalidated, disrupting both neighborhoods and workplaces by threatening to displace countless New Yorkers from their homes. These outcomes would be especially perverse given that supporters of strong property rights often argue that the constitutional protection of private property is meant to be a stabilizing force.

Fortunately for New Yorkers, the law isn’t on the landlords’ side, and judges commit to fairly applying the law as it is, not as litigants might want it to be. The law is clear: Protecting tenants is not taking from landlords, and no judge should stretch the Constitution to rule otherwise.

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