SerpApi.Org
A group of landlords filed a lawsuit Wednesday seeking to overturn the new rent freeze on New York City apartments, the real-estate industry’s first legal challenge to Mayor Zohran Mamdani’s signature campaign issue.
The lawsuit accused the New York City Rent Guidelines Board of going through a “sham process” before voting 7-1 in June for zero rent increases on one- and two-year leases. The board is supposed to act independently but the lawsuit alleges that Mamdani influenced the outcome.
The plaintiffs say they are the first to challenge the legal basis for the freeze. The lawsuit, filed in a New York state court, was brought by five small landlords who own rent-stabilized apartments in the city.The mayor’s office didn’t immediately respond to a request for comment.
The suit signals growing discontent in the real-estate industry over Mamdani policies aimed at making housing more affordable at a time when rents have surged to record highs. The rent freeze applies to roughly one million rent-regulated apartments on leases that begin on or after Oct. 1.
Mamdani last week also issued a 23-point plan to address a variety of other renter complaints, including strengthening the city’s ability to take legal action against negligent landlords with numerous safety violations. Real-estate groups said the plan unfairly demonizes their industry.
The Democratic socialist mayor stacked the board with loyalists who manipulated data on landlord expenses and income to reach their conclusion, the lawsuit said.
Other former mayors such as Eric Adams also appointed a majority of the board’s members. But the suit says Mamdani had City Hall representatives give board members a special briefing on the “‘true cost of living’” in New York City, “leaving no doubt” what the mayor “expected of his handpicked Board supermajority.”
The board is required by law to review the economic conditions of the residential real-estate industry before taking a vote. The plaintiffs accused the board members of instead cherry-picking data to understate operating costs and overstate the financial performance of landlords.
“Zohran Mamdani promised to deliver a rent freeze during his campaign and then he went to extraordinary lengths as a new mayor to guarantee it,” Randy Mastro, a lawyer for the plaintiffs, said in an interview. “This is a perversion of the process.”
The lawsuit cited the resignation of one board member, who represented landlords and said she was stepping down ahead of the June vote. She said she was resigning out of frustration that the board had ceased to be a fact-finding body and that her former colleagues intended to freeze rent no matter what the evidence showed.
Mamdani spent his mayoral campaign last year beating the drum on affordability, singling out the high cost of housing as a driving force behind people leaving the city. Freezing rents was a cornerstone of his plans to put money back in New Yorkers’ pockets.
For tenants, it offers welcome relief. Market rents in New York City have surged to record highs in recent years, and median wage increases for renters pale in comparison. Some New Yorkers see rent-stabilized apartments as a crucial way to stay in their neighborhoods as the housing market booms.
Median renter income in New York City increased by 1.8%, 2024 census data shows, while rent inflation for the metro area rose by 4.7%. In June, apartments in Manhattan rented for a median $5,295 a month, according to the Corcoran Group.
Landlords of rent-stabilized apartments have been howling in opposition to the rent freeze long before Mamdani won the election. They say their properties are already taking a beating from years of high interest rates, surging utility costs, rising insurance expenses and a 2019 law that greatly tightened rent regulations.
The city has allowed rent-stabilized landlords to raise their rents by roughly 3% for the past several years, but property owners say that doesn’t cover their costs. Many are sitting on mountains of debt and might have been foreclosed on by now, but they say banks don’t want their struggling properties either. They fear an all-out rent freeze will be the final blow.
An association of rent-regulated landlords previously lost a legal challenge to a rent freeze that the board approved in 2016, when Bill de Blasio was mayor. That lawsuit argued that the board wrongfully considered tenant affordability in its decision-making. A judge said tenant affordability was one of the factors the board could consider as long as it did so fairly and rationally.
Mastro, the plaintiffs’ lawyer and a former deputy mayor under Adams, said the new lawsuit is based on different arguments.
Arpit Gupta, who serves on the Rent Guidelines Board, wants to reform the city’s “one-size-fits-all” regulations on rent increases for rent-stabilized housing. Instead, he has advocated for a more targeted approach in which rent increases are based on the physical condition of a building.
“A single number cannot be uniformly applied across a million units,” Gupta said at an RGB hearing in May. He cast the lone dissenting vote against the rent freeze in June.
Write to James Fanelli at [email protected] and Rebecca Picciotto at [email protected]