New York lawmakers propose changes to Scaffold Law to reduce litigation costs and address NYC’s housing crisis.

New York City is once again grappling with a widespread concern that affects its residents profoundly: the cost of housing. A recent survey indicated that over half of the respondents express a willingness to leave the city due to the prohibitive housing expenses. This response underscores a significant and urgent issue that city officials and stakeholders need to address.

A new report from the Partnership for New York City, titled “Excessive Litigation is Driving New York’s Affordability Crisis,” highlights an often-overlooked contributor to the skyrocketing housing costs in the area: the state’s antiquated legal framework. Notably, litigation costs in New York are 67% higher than the national average, driven by a high volume of lawsuits, inflated settlements, and a legal environment that arguably promotes claims of fraud. The consequences of these expenses are dire, as they are ultimately passed down to renters, homeowners, and developers.

As many local developers have noted, they face significant hurdles in advancing their projects, not due to a lack of motivation but because of soaring costs—specifically in terms of insurance pricing. Central to this issue is New York’s “Scaffold Law,” implemented in 1885, which establishes a system of absolute liability for property owners and contractors involved in construction. This law remains unique to New York, as all other states have transitioned to a comparative negligence model, which takes into account the responsibility of all parties involved in an incident.

Under the current Scaffold Law, developers face 100% liability even if a worker fails to comply with safety protocols, impacting their ability to take on new projects. Reforming this law is essential not merely for legal fairness but also for the sustainability of affordable housing initiatives in the city.

As the state approaches the 2026 legislative session, there is an increasing call for lawmakers to replace the Scaffold Law with a comparative liability standard. Such a change could lead to reduced insurance costs, fostering a more conducive environment for affordable housing developments. The urgency of this reform is further emphasized by proposed federal legislation, including the Infrastructure Expansion Act of 2025, which aims to exempt federally funded projects from New York’s Scaffold Law.

Moreover, additional reforms are necessary to tackle the growing prevalence of fraudulent injury claims and staged accidents that contribute to the rising costs of insurance. In certain neighborhoods, general liability insurance has reached exorbitant levels, with some costs exceeding ,400 per unit, ultimately impacting renters.

Legislative efforts, such as those proposed by State Senator Leroy Comrie and Assemblyman David Weprin, could play a crucial role in addressing these pressing issues. These measures aim to combat fraudulent claims that not only inflate insurance costs but also threaten the availability of affordable housing.

The necessity for an adequate supply of affordable housing cannot be overstated, as it is integral to the city’s economic resilience and social cohesion. Without immediate reforms, the risk of losing thousands of affordable units looms large, potentially exacerbating inequality and displacement across the city. Every dollar expended on unnecessary litigation or inflated insurance premiums detracts from investments in housing solutions.

New York’s housing crisis is not predestined; it is the result of decisions that can be revised. Through prudent reforms aimed at updating the Scaffold Law and countering fraudulent activities, stakeholders can restore equity in the housing sector and generate more options for residents in need.

The imperative for action is pressing. It is incumbent upon lawmakers to take decisive steps to ensure that the dream of affordable housing remains within reach for all New Yorkers.