Amid soaring apartment lease costs, does NJ have rent control?
TRENTON – Rents, like seemingly everything else, have been spiking lately in New Jersey.
The June 2022 monthly report from Rent.com published Wednesday shows the average rent price in the state has increased by 36% over the past year to $2,414 a month for a one-bedroom apartment and by 42% to $2,981 for a two-bedroom unit. Both are about 3% bigger than what was reported a month earlier.
Jersey City has experienced among the nation’s biggest jumps, up almost 49% for a one-bedroom apartment over the past year to $4,291 and 45% for a two-bedroom apartment to $5,752.
The skyrocketing costs lead to the question: Does New Jersey have rent control?
The short answer is no. Oregon is the only state with a statewide rent control law.
But the long answer is that it depends on where you live, as New Jersey has roughly 100 municipalities with local rent control ordinances, which the Urban Institute says accounts for more than half of such laws in the country.
“Probably 50% of the tenants in the state in New Jersey are covered by rent control because most of the hundred-plus towns that have rent control are in the northern part of the state,” where populations are generally larger, said Mitch Kahn, vice president of the New Jersey Tenants Organization.
Those ordinances vary, and you’d want to check with City Hall or Borough Hall to get the details.
How does rent control work?
Kahn said there are three things to look at: Does it cover all rental housing or exempt smaller buildings, such as those with fewer than four apartments? Does it permit vacancy decontrol? And what increase is allowed each year?
Allowable increases vary by town, with some places saying 3% or 4% and others tying it to the yearly inflation rate. But Kahn said many of the towns that rely on the CPI also have a maximum increase.
“They would say, like, the consumer price index or 5%, whichever is lower,” Kahn said. “So, in many of those towns that have rent control, the landlords aren’t going to be able to get 8% rent increases.”
What is vacancy decontrol?
The vast majority of rent control ordinances have vacancy decontrol – allowing landlords to increase rent beyond the ordinary increase, in some cases all the way to whatever the market would bear, when a tenant departs. Kahn said that change has undermined affordability.
“I would argue that vacancy decontrol basically has killed rent control in the state of New Jersey and elsewhere,” Kahn said.
Push for rent control in NJ
Kahn said the rent control movement sputtered by the early 1980s and that few additional municipalities anywhere in the country added such laws for decades.
Interest began to stir as the longstanding challenge with housing affordability pinched middle-class and upper-middle-class families. The COVID pandemic added to that, as city residents began gobbling up homes and apartments in the suburbs, driving people out and rents higher.
Kahn said he sees interest in rent control “being reignited” in the state.
“In New Jersey, where it’s happening is in those towns that are going through some form of gentrification – like Montclair, like Asbury Park,” he said.
Plainfield could be next, Kahn said.
Can rent increases be challenged in NJ?
Even in municipalities that don’t have rent control, tenants do still have some recourse to fight rent increases.
If the increase is “unconscionable,” they can tell the landlord they decline to pay it, offer a compromise alternative and pay that lower rate. The landlord could choose to accept that – or go to court asking a judge to evict the tenant.
But Kahn said the risk is that there is no set definition and that a decision depends on the views of the judge hearing the case.
“Up until this most recent inflationary spike, the unconscionability standard was generally 10%, maybe a little higher if the landlord had not raised the rent in 10 years or 12 years or whatever,” Kahn said. “But now, who knows what it is?”