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Lawsuit Challenges New York’s Rent Stabilization Law—a Law That Keeps Apartments Off the Market During a Housing Crisis
Institute for Justice
December 9, 2025
NEW YORK CITY—Tens of thousands of apartments sit vacant in New York City, in the midst of a housing crisis. The reason is because New York’s Rent Stabilization Law (NYSRL) sets the rent so low that building owners cannot afford to put the units on the market. Today, a group of New York City building owners partnered with the Institute for Justice (IJ), a nonprofit public interest law firm, to file a lawsuit challenging the law’s application to those vacant apartments. The lawsuit doesn’t seek any changes to rules governing current tenants. Instead, the lawsuit seeks to free up apartments that would otherwise sit empty at a time when many people can’t find a home.
“Courts have upheld the government’s ability to protect existing tenants from rent increases, and we aren’t challenging that here,” said IJ Senior Attorney Rob Johnson. “But when an apartment is vacant there’s no tenant to protect. And when the law sets the rent so low that the apartment can’t profitably be rented, that doesn’t help anyone. It just takes the value of the apartment and destroys it—violating the Constitution’s protection for property rights.”
In most jurisdictions that have rent control laws, the law restricts the amount that owners can increase the rent on an existing tenant but allows owners to charge market rent when leasing a vacant apartment to a new incoming tenant. For instance, while some California cities have fairly restrictive rent control laws, the California state legislature passed a law in 1995 that prohibits cities from limiting the rent that landlords can charge for vacant apartments. That type of vacancy reset provides an important safety valve that helps stop rents from getting too far out of alignment with underlying market realities. But under current law, New York has no such safety valve.
Pashko and Tony Lulgjuraj are brothers and business partners who own and operate a building in New York City with vacant apartments that cannot be rented because of the Rent Stabilization Law. The units could cost tens or even hundreds of thousands of dollars to get ready but are limited by law to rent as low as $700. So they will remain vacant.
“We want to rent these apartments,” said Pashko. “This is our business and our livelihood. The law isn’t just hurting us, it’s hurting New Yorkers who we could otherwise provide with housing. It makes no sense.”
The brothers are small landlords who own just a few buildings in New York City. As ethnic Albanians from then Yugoslavia, they came to New York as children, brought by parents who came to America in pursuit of a better life. The brothers worked several jobs, including as a doorman and superintendent, until they could afford to buy an apartment building.
It’s not just building owners who are harmed by the NYRSL, but prospective tenants as well. In 2024, the U.S. Census Bureau released data showing at least 26,000 rent stabilized units were vacant but unavailable for rent. To put that number in context, that same year construction added nearly 34,000 new units across the city. In other words, freeing up vacant units for rent could contribute close to a year’s worth of construction to the housing supply, providing an immediate boost in the number of available apartments for a city in desperate need of exactly that.
“When the government regulates property to the point where it cannot be used, that is an unconstitutional taking. And that is what the government has done to these apartments,” said IJ Attorney Suranjan Sen. “In addition to violating the Constitution, this also aggravates the problem the government is trying to address. By forcing apartments off the market, the government is denying tens of thousands of potential New Yorkers a chance to find a home.”
The Institute for Justice (“IJ”) is the nation’s premier defender of property rights. At no charge to its clients, IJ defends the rights of homeowners against eminent domain abuse, as in Kelo v. City of New London and DeVillier v. Texas; uncompensated property destruction, as in Baker v. City of McKinney; abusive fines and fees against homeowners, as in Ficken v. City of Dunedin; and against regulations that restrict the housing supply, as in Tiny House Hand Up v. City of Calhoun. IJ also aims to protect and promote the freedom to use property through its Zoning Justice Project, as a way to expand housing opportunities around the nation.
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Author: Phillip Suderman