Allowable Rent Increases for New Jersey Tenants

Allowable Rent Increases for New Jersey Tenants
New Jersey rent controls protect a large percentage of the state's renters.

History

In the United States, rent control is a local law that limits increases in rent, which has its roots in veteran's rights. During World War II, housing construction was deferred to allow material and manpower resources to go into the war effort. When soldiers returned home from war, they had trouble finding a place to live. Some landlords took advantage of the housing shortage by jacking up prices. At first a federal law was passed to prevent this practice. When it looked like it was going to expire, some states, New Jersey among them, passed a state law limiting rent increases statewide. This state law expired in the 1950s. In the 1970s, with a rising tide of housing shortages and rising rents in some cities, a number of New Jersey cities and towns passed local rent control ordinances.

Rent Control

More than 100 cities and towns in New Jersey are subject to rent control. Newark's rental control law is the oldest. In Newark, rent control applies to non-owner occupied 1- to 4-unit buildings and all larger older buildings. Landlords may increase rents 5 percent a year for complexes of 49 units or less and 4 percent for units in complexes of 50 units or more. In Trenton, rent increases are tied to the consumer price index. Every jurisdiction has its own, unique set of controls. They can often be found online, at the city's website.

State Exemption

State law exempts all buildings constructed after 1987 from all municipal rent control for 30 years from the construction date. The thinking behind this prohibition is that if rent control applies to all construction, builders would have no incentive to construct new housing, exacerbating whatever housing supply and demand issues that already exist. A 30-year exemption allows builders a lengthy period of time, equal to a common depreciation term, to recover construction costs through rents and sales price.

Unconscionable Rents

State law in New Jersey also includes a statewide prohibition on "unconscionable rent increases" -- that is, rent increases that are so large they result in the tenant having to leave. This is important because New Jersey is one of only two states that has a statewide "just cause eviction" requirement; it prohibits evicting a tenant without a good reason, like failure to pay rent. An unconscionable rent increase effectively aims to skirt the just cause requirement because it effectively results in an eviction. Whether a rent increase is unconscionable is determined by a judge. It is not permitted.