Newark, NJ – June 7, 2023 — Mayor Ras J. Baraka announced today that the Newark Municipal Council approved an ordinance imposing fines of up to $1,200 for each apartment not under rent control where tenants are required to pay an unconscionable rent increase of more than five percent in a single year.
In defining increases of more than five percent as unconscionable, the ordinance builds upon a state anti-eviction law making it illegal for a landlord to impose a rent increase so large that it is “unconscionable.” The new law became necessary because Newark residents not protected by rent control are suffering from the national trend of rents rising faster than income growth. In 2022 according to Zillow, Newark’s average rent increased by 11.2 percent from $1,802.50 to $2,004.78.
“Newark faces a crisis of affordability. The value of property in Newark is increasing rapidly. Landlords are charging rents of over $2,000 for one-bedroom apartments in areas where they were just $750 five years ago. 30 percent of the rental housing in Newark is not under rent control, and there is presently no penalty for how much a landlord can increase those rents,” Mayor Baraka said. “The Unconscionable Rent Increase Ordinance is one important step that we have taken toward keeping Newark affordable. It’s not the only one, but it’s a big step toward continuing to be the kind of culturally and economically diverse city that makes Newark so special.”
The Unconscionable Rent Increase Ordinance protects the poorest Newarkers and all others who are without rent control, and don’t live in public housing. It is not designed to protect those who can afford high rents.
The City Office of Tenant Legal Services (OTLS), which provides free legal services for low-income tenants facing eviction report that low-income tenants have faced rent increases of as much as $945 in the East Ward, $816 in the South, $750 in the Central, $550 in the North, and $445 in the West.
While Newark is creating and preserving affordable housing, the supply of affordable housing is being eroded by LLCs that are buying up owner-occupied homes and turning them into high priced rentals. Purchases of residential properties in Newark by corporate entities is already causing rents to rise and owner-occupancy to fall, according to the research study – “Who Owns Newark – Transferring Wealth from Newark Homeowners to Corporate Buyers” a report authored by David D. Troutt, Distinguished Professor of Law; Director of the Rutgers Center on Law, Inequality and Metropolitan Equity (CLiME) and a member of the City’s Equitable Growth Advisory Commission. The study found that 47 percent of home sales were sold to institutional investor buyers from 2017 to 2020. That makes it all the more urgent for Newark to protect affordability in all of its housing.
The Unconscionable Rent Increase Ordinance supplements another ordinance, the Newark Rental Registration Ordinance passed in April, requiring landlords to register all rental units with the City’s Department of Economic and Housing Development (EHD). With a substantial number of Newark units presently not subject to registration by the City, that ordinance requires every currently rented unit in Newark to be registered within 120 days of its adoption and will facilitate enforcement of the Unconscionable Rent Increase Ordinance.
