 This Law Could Tip New York? Housing Market into a Death Spiral |
Source |
American Shipper |
Post Date |
09/08/2025 |
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If leftunreformed, Good Cause Eviction could shrink rental supply, reduce quality, andincrease blight.
On April 20, 2024, New York State enacted its Good Cause Eviction law. The law appliedimmediately to New York City; other municipalities could opt in. Since then,more than a dozen cities have adopted it, including Albany, Rochester, andBinghamton.
Given that 45 percent of NewYork households rent, including 70 percent in NewYork City, the law could reshape housing markets across the state?or theworse. If left unchanged, Good Cause is likely to shrink rental supply, shiftownership toward large institutional investors, and worsen housing quality.That could tip the state? housing stock into a downward spiral much like theone New York City experienced in the late twentieth century.
Good Cause pairs onerous limits on when landlords can atenancy with annual rent-increase caps amounting to the lesser of either 10percent or inflation plus 5 percent (8.82 percent for 2024). Landlords canevict only for specific reasons: nonpayment, substantial lease violations,nuisance or illegal use, major property damage, or the landlord? intent tooccupy, demolish, or take the unit off the market. Tenants in covered units areentitled to renew their leases unless one of these grounds applies.
The structure of Good Cause echoes the Rent StabilizationLaw of 1969 and theEmergency Tenant Protection Act of 1974, which similarlycombined just-cause eviction rules with rent ceilings. These policies slowednew rental construction, encouraged conversions, and degraded housing quality.
The long-term effects of rent control are clear in theacademic literature. Under rent control, developers shift from rental toowner-occupied construction; landlords convert units tocondos or co-ops; and supply in the regulated market contracts. Scarcity pushesup rents in unregulated units.Capped returns reduce maintenance becausethey make it harder for landlords to recoup costs. At the same time, mobility declineswhile tenants remain in units that no longer match their needs.Benefits often accrue to high-income, long-termtenants rather than to the low-income households the policy aims to protect.
Good Cause exempts public housing, rent-regulatedapartments, new construction (for a limited time), and owner-occupied buildingswith fewer than ten units. However, some cities have sharply narrowed thesecarve-outs. Rochester, for example, restricts the exemption to landlords whoown a single rental unit,placing over 98 percent of its rental stock under Good Cause.
Owners have limited ways to offset capped rents. Evictionscan take months and require legal action in nearly all cases. Faced with risingcosts and procedural hurdles, many owners are likely to convert units to condosor sell to large institutional investors.
Rochester? landlords are already selling toout-of-town buyers, shifting ownership away from local operators, who have astake in neighborhood stability. Albany, with similarly narrow exemptions,faces comparable risks.
In Binghamton, the city council overrode Mayor JaredKraham? veto and adopted Good Cause.More than half the city? housing was built before 1939, and less than 5percent since 2000. Capped rents in such a market limit funds for upkeep. Inareas where many properties need significant repairs and code enforcement isstretched thin, the law may push marginal buildings past viability.
Landlords facing higher legal costs and restricted rentgrowth may walk away from their properties or sell to less committed owners,shrinking habi stock and increasing blight. This is what happened with NewYork City? pre-1974 rent-stabilized units.
Today, those units have the highest rate of maintenancedeficiencies?eaks, broken plumbing, structural damage?veraging 75 percentmore issues than newer stabilized units and 79 percent more than market-rateapartments. Since 2022, 176 rent-stabilized units have gone into foreclosure?nnualforeclosures have roughly doubled each year?ith over 2,000 more inmortgage-default warnings.
New York City? rental market already operates undera highly complex regulatory tem, with more than 1million apartments covered by rent stabilization. Exting Good Cause tocurrently unregulated units brings more owners into a costly, restrictivetem. High property taxes, steep utility bills, and some of the mostexpensive construction costs in the world already leavemany landlords with thin margins. When expenses outpace capped rent increases,their options narrow to deferring repairs, selling, or converting units.
According to Ann Korchak of the Small Property Owners ofNew York, limiting rent increases ?estricts an owner? ability to maintain,upgrade, and renovate,?pushing some properties towards foreclosure. She warnsthat selling to ?eep-pocketed corporate landlords?would accelerate the lossof affordable, family-owned housing.
The city has seen similar dynamics before. From thelate 1970s through early 1990s, inflation in fuel,labor, and taxes far exceeded allowable rent increases, pushing many landlords intoforeclosure or abandonment. Morethan 200,000 rental units werelost. In parts of the Bronx, more than 80percent of housing stock was destroyed, often from arson linked tocollapsing property values. Good Cause risks repeating this cycle, especiallyin older, low-margin buildings.
To prevent a repeat of the twentieth-century rent-controlcollapse, legislators should adjust the law to protect tenants from unjustevictions, while preserving landlords?capacity to maintain properties. Thiscould involve raising exemption thresholds so that smaller, community-basedlandlords are not driven out; allowing cost pass-throughs for documented majorrepairs, tax hikes, or utility increases; strengthening code enforcement andinvesting in rehabilitation in older markets to prevent blight; and addingsunset reviews?ime-limited provisions that require the law to be revised andreauthorized?ith mandatory legislative reconsideration if data show supplyloss or quality decline.
Tenant stability and a functional rental market are notmutually exclusive. Without targeted reforms, Good Cause may usher in a new eraof rent control with the same destructive outcomes as the last.
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