Mayor Ras J. Baraka announced a significant development for Newark residents. The Newark Municipal Council has officially approved an ordinance enforcing fines of up to $1,200 for each non-rent-controlled apartment where tenants are subjected to a rent increase of over five percent within a year.
This new ordinance builds upon an existing state anti-eviction law, which deems rent increases beyond five percent as “unconscionable” and illegal for landlords to impose. It has become necessary due to the growing issue faced by Newark residents who are not protected by rent control. They are grappling with the national trend of rents rising faster than income growth. In 2022, according to Zillow, Newark experienced an average rent increase of 11.2 percent, surging from $1,802.50 to $2,004.78.
Mayor Baraka highlighted the urgency of addressing Newark’s affordability crisis, emphasizing the rapid increase in property value within the city. Landlords are now charging over $2,000 for one-bedroom apartments in areas where rents were just $750 only five years ago. Shockingly, 30 percent of rental housing in Newark is not subject to rent control, leaving no penalties for landlords who excessively increase rents. Mayor Baraka described the Unconscionable Rent Increase Ordinance as a significant step toward maintaining Newark’s affordability and preserving its unique cultural and economic diversity.
The primary purpose of the Unconscionable Rent Increase Ordinance is to protect the most financially vulnerable Newark residents, as well as those without rent control who do not reside in public housing. The ordinance does not aim to shield those who can comfortably afford higher rents.
According to the City Office of Tenant Legal Services (OTLS), which offers free legal aid to low-income tenants facing eviction, low-income tenants have experienced rent increases as high 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 actively working to create and preserve affordable housing options, the supply is being depleted by limited liability companies (LLCs) that purchase owner-occupied homes and convert them into high-priced rentals. A research study titled “Who Owns Newark – Transferring Wealth from Newark Homeowners to Corporate Buyers”, authored by David D. Troutt, Distinguished Professor of Law and Director of the Rutgers Center on Law, Inequality and Metropolitan Equity (CLiME), along with a member of the City’s Equitable Growth Advisory Commission, reveals that corporate entities accounted for 47 percent of residential property purchases from 2017 to 2020. This trend further emphasizes the importance of Newark’s efforts to safeguard affordability across all housing options.
The Unconscionable Rent Increase Ordinance serves as a supplement to another ordinance, the Newark Rental Registration Ordinance, passed in April. This requires landlords to register all rental units with the City’s Department of Economic and Housing Development (EHD). Given that a significant number of Newark units are currently unregistered, this ordinance mandates the registration of all rented units within 120 days of its adoption. This step will facilitate the effective enforcement of the Unconscionable Rent Increase Ordinance.
