Following the decision in June to implement a rent freeze in New York City, it was widely expected that exasperated landlords, facing even higher maintenance costs and increased upkeep expenses for rent-stabilised apartments, would initiate legal action to overturn the resolution. This has now become a reality.
A group of five small landlords who own rent-stabilised properties in the city filed a lawsuit against the Rent Guidelines Board (RGB) in a New York State court on Wednesday. The reason for the suit is the RGB's vote last month, which decided by seven votes to one to freeze rents for one- and two-year leases for rent-stabilised apartments in the city.
Accusations of Manipulation and Political Influence
The landlords – represented by LLC Kenilworth Holdings – allege in the lawsuit that the RGB went through a 'sham process' before the vote and that Mayor Zohran Mamdani influenced the outcome of the decision. The complaint further states that the Mayor appointed RGB members who were 'predisposed to bringing about a rent freeze'. The RGB also 'ignored evidence of sharply rising landlord costs and manipulated data to underestimate the impact of these costs'.
Furthermore, the landlords stated in the lawsuit that the RGB ignored petitions from applicants showing that 'they and similarly situated landlords cannot survive a rent freeze'. This marks the first time that the city's real estate industry has challenged the legal basis of the rent freeze, and also the first legal challenge against Mayor Mamdani since he took office.
Randy Mastro, attorney for the landlord group, told the Wall Street Journal, which first reported the news, that Zohran Mamdani had promised a rent freeze in his election campaign and then, as the new Mayor, 'undertook extraordinary efforts to guarantee it'. He described the approach as a 'perversion of the process'. Spokespersons for the Mayor's office and the RGB did not immediately respond to requests from Commercial Observer.
Resignation and Far-Reaching Implications
The lawsuit also refers to the resignation of Christina Smyth, a landlord representative and RGB member since 2022. Smyth stepped down just hours before the RGB's rent freeze vote on 25 June. In her resignation letter, she accused the Board of ignoring the law and voting to satisfy Mamdani's agenda. 'This year’s [Rent Guidelines Board] order was decided last year in the campaign,' Smyth wrote in her letter at the time. 'Everything since then has been theatre. The hearings, the reports, the public comments, the data. None of it could ever have changed the outcome.'
Although the vote represented a victory for Mamdani, who dedicated his entire mayoral campaign to promising a rent freeze and more affordable housing, it was a clear sign that legal action would follow, as the decision led the city's landlords into uncharted territory. The vote affected approximately 1 million apartments across the five boroughs, which accounts for 40 per cent of the city's rental housing stock. The landlord group that filed the lawsuit is not alone, as the vote led virtually the entire industry to conclude that the vote was manipulated.
Kenny Burgos, CEO of the New York Apartment Association, told CO in June: 'This is a decision that was predetermined based on the wishes of the Mayor, because he stacked the board to fulfil his wishes.'
