Landlords Sue To Reverse Rent Freeze On 1 Million Apartments

NEW YORK — New York City landlords are suing to block the recently-approved rent freeze championed by Mayor Zohran Mamdani.

The complaint, filed in Staten Island Supreme Court, alleges Mamdani placed undue influence on the nine-member Rent Guidelines Board — which then cherry picked data to understate landlord costs and overstate incomes. The mayor-appointed panel voted 7-1 in favor of a rent freeze on one- and two-year leases. The decision will take effect on leases signed on or after Oct. 1.

The board “made a mockery of its statutory mandate, resorting to multiple manipulations of its own data to try to justify this irrational result. And this all comes amid unchecked inflation and rising costs that struggling landlords will have to bear to survive,” the lawsuit alleges.

Mamdani ran on a marquee campaign pledge to freeze rents on the city’s 1 million rent-stabilized apartments, but has not explicitly called for a rent freeze since taking office.

“Once he assumed office, the Mayor went to extraordinary lengths to pack the Board with loyalists and then spent millions in City funds to fill the Board’s hearings with tenant advocates,” the lawsuit states.

It’s standard for mayors to appoint members to the rent panel, and the board has often reflected the leanings of City Hall. The board’s data found landlord costs up 5.3 percent this year, but it also reviewed figures showing landlord incomes were up 6.2 percent.

Among the attorneys representing the landlords behind the suit is Randy Mastro, former first deputy mayor under Mamdani’s predecessor, Eric Adams. Mastro is separately feuding with Mamdani’s administration over legal questions about changing the city charter.

The complaint cited a special briefing by City Hall representatives to the rent panel on the “true cost of living” in New York City, as well as the resignation of landlord representative Christina Smyth just before the June vote.

The special briefing to the board had the effect of “compromising its independence and leaving no doubt what [Mamdani] expected of his hand-picked Board super-majority,” the complaint alleges.

In her resignation letter, Smyth alleged the board had crossed a “legal line.”

“A board that votes to freeze rents while knowingly disregarding its own evidence of rising costs and falling income is not acting within those limits,” she wrote.

The real estate industry has sued previously to reverse a prior rent freeze decision and to upend rent-stabilization in New York entirely. Those lawsuits were unsuccessful, but landlord interests have argued that as the rent regulation regime continues to become more restrictive, legal challenges could find more success.

Notably Arpit Gupta, the sole Adams appointee on the rent panel who cast the lone dissenting vote on the rent freeze, dismissed the notion of City Hall interference during a recent panel discussion.

“I observed no interference by the administration in individual members’ decisions. I have to credit the administration on that independence, and I have to credit the professional, hardworking staff who provided excellent data and services,” Gupta said during a discussion convened by Vital City. “I stand firmly on those two points. As we discussed earlier, how to interpret the mandate is largely a matter of discretion left to the board.”

Gupta nonetheless raised concerns about the impact of a rent freeze on the financial and physical health of rent-stabilized buildings. And he added, “I hear where Christina is coming from in her frustration about what we do as a society if we have a board able to systematically set these adjustments through a freeze.”

City Hall spokesperson Matt Rauschenbach said the law department is “prepared to defend the RGB’s decision.”

“The Rent Guidelines Board is an independent body. We are confident that the Board evaluated all of the relevant data and considered the factors facing both tenants and landlords across New York City,” he said in a statement. “The Mamdani administration remains committed to the success of the rent stabilization system which has prevented displacement and provided stability to generations of New Yorkers.”

This report has been updated to include comments from Arpit Gupta and the Mamdani administration.