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Newark City Council Passes New Rent Control Ordinance

Rent Control Ordinance

NEWARK, N.J. - The Newark City Council passed a new ordinance that will make it harder for rental property owners to raise rents of tenants in rent-controlled properties. Under the previous rules, owners of rent-controlled buildings could raise rents annually by five percent if the building had 49 units or less and by four percent if the building had more than 49 units. The new ordinance caps the annual rent increases to the Consumer Price Index (CPI) in New Jersey for the previous year. The 12-month CPI in the New York-New Jersey area has been at two percent or less since December 2013, according to the U.S. Bureau of Labor Statistics.

Under the old rules, property owners could also ask the city to raise rents in vacant apartments up to 25 percent if they showed proof that they spent $100 or more per room to rehabilitate the unit. The new ordinance caps the increase to 20 percent and raises the threshold for rehabilitation costs to $5,000 per room per unit.

Opponents of the new ordinance included multiple property owner groups, including the New Jersey Apartment Association (NJAA). The NJAA actively participated in the hearing process before the city council. The primary objection to the new law is that it fails to take into account the cost of maintaining buildings; the restrictive cap on annual rent increases creates a disincentive for owners to make improvements to their properties. Proponents said the legislation prevents renters from enduring burdensome increases in rent for minor or no improvements to their units.

The ordinance passed by a 6-1 vote. There are more than 10,000 rent-controlled properties in Newark, according to the city's most recent records. Properties typically fall under rent control if they are at least 30 years old.

The Star Ledger, New Jersey Apartment Association, U.S. Bureau of Labor Statistics