How New York’s Good Cause Eviction Law Regulates Rent Increases

New York recently passed the "Good Cause Eviction" law, which prohibits landlords from evicting tenants without a valid reason. Experts highlight that this law effectively introduces a form of rent regulation, as it includes provisions for controlled rent increases alongside over a dozen other justifications for eviction, Forbes reports.

Key Provisions of the Law

The Good Cause Eviction law allows landlords to raise rent annually by no more than the rate of inflation (measured by the Consumer Price Index) plus 5 percentage points. In certain cases, the increase can reach 10%, though this figure is reviewed annually. Currently, the cap is set at 8.82%, significantly higher than the modest increases permitted under other New York rent control schemes, which Forbes describes as "punitive and unreasonable."

If a landlord seeks to raise rent beyond the prescribed cap and the tenant refuses to pay, it does not constitute "good cause" for eviction. While landlords theoretically have the option to argue in court that construction costs or other circumstances justify a higher increase, few are likely to pursue such measures.

This provision allows landlords a more reasonable, albeit still constrained, ability to maintain rent levels aligned with their expenses, provided inflation remains manageable. Annual rent increases are determined through a formulaic approach, offering a more predictable framework compared to New York’s traditional rent stabilization and control laws, which often fail to account for rising operational costs and contribute to the gradual deterioration of housing stock.

Impact on the Housing Market

Since the New York State Legislature tightened rent control laws in 2019, the value of affected multifamily properties has plummeted. This decline, which many view as an unconstitutional seizure of property, has deterred investors and lenders from engaging with New York’s multifamily real estate market.

Despite the 8.82% cap, few landlords raise rents to such an extent. Excessive rent hikes risk losing tenants, leading to significant vacancy costs and diminished profits. Most landlords aim to retain tenants and limit rent increases to market-acceptable levels, which are typically well below the cap.

However, the cap may inadvertently encourage landlords to raise rents more aggressively than they might otherwise. Under the law, unused rent increase allowances cannot roll over to subsequent years, pressuring cautious landlords to implement the maximum permissible hikes annually to mitigate future inflation or cost increases.

Potential Benefits and Challenges

The Good Cause Eviction law could provide legislators with a pathway to relieve New York's rental housing market from the burdens of stricter rent control measures, which apply to many apartments. The law introduces a safety net to protect tenants from excessive rent increases if New York transitions away from rent stabilization and control systems. Such changes would help phase out regulatory frameworks that have constrained the housing market for decades.

By potentially fostering a more functional rental market, the law aims to remove political motivations for artificially low rents, improve landlord-tenant relationships, alleviate the housing crisis, and preserve affordable housing that might otherwise deteriorate.

Current Market Landscape

As of January 15, 2025, the median rent across all property types in New York City stands at $3,300, $50 less than in January 2024, according to Zillow. This rate is 65% higher than the national average of $2,000. Rental costs in New York range from $325 to $150,000, depending on location and property type, with 15,869 rental listings currently available.

Outlook for New York’s Rental Market

While the Good Cause Eviction law introduces opportunities to stabilize the rental market, critics argue it may unintentionally encourage rent increases and deter property investment. Nevertheless, it provides a potential framework for reducing the housing crisis and fostering a healthier, more sustainable market for both tenants and landlords. The long-term success of the law will depend on balancing tenant protections with the economic realities faced by property owners.