New York City approved a rent increase of at least 3% for roughly 1 million rent-stabilized apartments in one of the world’s most expensive markets as economic pressures hit both landlords and tenants.

The nine-member Rent Guidelines Board, made up of two members each representing tenant and owner interests and five others advocating for the general public, and all appointed by the mayor, voted to raise rent by 3% for a one-year lease beginning on or after Oct. 1. Rent on a two-year lease will increase 2.75% in the first year and 3.2% in the second year, for a total of about 6%.

The hikes are within the ranges the panel decided in a preliminary vote in May, when the board approved rent increases of between 2% and 5% on one-year leases and 4% and 7% on two-year leases. Last year, the board voted to raise rent by 3.25% for a one-year lease and a two-year lease by 5% in the largest rent hikes in about 10 years.

The issue of capping rent hikes has taken on added urgency over the past year. The Federal Reserve’s 10 interest rate increases and inflation peaking at a 40-year high before easing have made it more difficult for tenants to pay rent and harder for owners to profitably run apartment buildings. The debate has involved court decisions and state legislatures as different governing bodies around the country take various and sometimes competing approaches toward regulating the cost of an apartment.

On Thursday, the Legal Aid Society representing tenants said in a post on Twitter that “the Rent Guidelines Board has voted to increase rent for residents of stabilized apartments, lofts, and hotels — in the middle of a housing crisis! The rent was already too damn high! And things are about to get worse.”

That contrasted with what executives at the Rent Stabilization Association, which represents 25,000 New York apartment owners, said in an opinion piece for the New York Post on Tuesday: “There’s no accounting gimmick around rent revenue not keeping up with constantly increasing expenses, no matter how many politicians storm the stage or create false narratives to disrupt the process. Rent-stabilized tenants are not a monolithic group with the same experiences. … There are those with six-figure incomes and beach and country homes. … This, unfortunately, is the housing arena, a political hothouse where decisions aren’t based on sensible math and those who shout the loudest historically get their way.”

In 2021, there were a little over 1 million rent-stabilized units in New York, representing just 28% of the city’s overall housing stock and 44% of its rental units, according to a survey by the Department of Housing Preservation and Development and conducted by the U.S. Census Bureau.

Among rent-stabilized units, the median monthly rent was $1,400, according to the study that said stabilization generally applies to units in buildings built before 1974 with six or more units. In contrast, apartment market asking rent per unit in New York has increased to a record high of $3,042 on average, according to CoStar data.

As competing interests on both sides escalate, some states have allowed at least some form of local rent regulation. That has led to some multifamily developers and investors to pause or scale back in markets with strict rent control laws, arguing that caps on rent increases crimp the bottom line too much to warrant investing.

Currently, 33 states preempt local governments from adopting rent regulation laws while California, the District of Columbia, Maine, Maryland, Minnesota, New Jersey, New York and Oregon have rent control policies in place at the state or local level, the National Apartment Association said on its website.

Earlier this year, the Biden administration announced plans to create a national renters bill of rights to address housing affordability.

According to a study published last year by New York University’s Furman Center for Real Estate and Urban Policy, the board’s decision on rent is “far more determinative of the long-term economic health of buildings with rent regulated apartments” because of the 2019 state Legislature’s passing of the Housing Stability and Tenant Protection Act, or HSTPA.

That act limits or does away with building owners’ ability to raise rents in various situations, such as when apartments become vacant or when they need to help recover costs of investing in major overhauls, according to the study, adding buildings without any significant source of income other than from rent-stabilized apartments are “at particular risk” in the wake of the act.

The National Association of Realtors, National Apartment Association, National Association of Home Builders and Mortgage Bankers Association recently joined forces to file an amicus brief supporting plaintiffs in two separate but related legal cases calling for the U.S. Supreme Court to hear a challenge to the New York rent stabilization law, contending it infringes on property rights by limiting apartment rent increases.

Lower courts have upheld New York’s state rent regulations enacted in 2019 and later challenged in two different legal cases, one filed by parties including Community Housing Improvement Program and another by a group of parties led by 74 Pinehurst LLC, with New York City as the defendant.

In a statement recently, quoting their amicus filing, the trade groups said governments are “continually finding ways to encroach upon private-property rights” and have forced property owners “into serving the state without compensation.” The groups called on the Supreme Court “to provide guidance to lower courts assessing challenges to burgeoning restrictions on private property.”

The laws place limits not just on maximum rent increases for properties of six or more units. They also restrict owners from occupying apartments themselves by evicting a tenant, or removing units from the rental market under certain conditions.

Proponents said the New York regulations were needed to protect renters in the face of rising costs and limited supplies of affordable workforce housing. Opponents said rent control laws like New York’s put undue burdens on smaller “mom and pop” owners and infringe on their ability to earn income from properties.

In making its case for a national renters bill of rights, the White House in January said housing has become less affordable since the onset of the pandemic, with “some landlords taking advantage of market conditions to pursue egregious rent increases.”

Apartment landlord groups responded by expressing concern about the initiative, saying the federal government should focus on increasing housing availability rather than adding regulations.