Rent control in Montclair is slated to go into effect on May 9 — part of a deal that also allows landlords to legally increase rents for the first time in two years.

A separate rent increase freeze — authorized by the Township Council in the pandemic, citing powers under New Jersey’s state of emergency — will no longer be in effect. The council first voted for the freeze in May 2020 and reauthorized it every three months since.

Generally, annual rent increases will be capped at 4% for rental properties containing two or three units in which an owner does not reside, as well as for units in buildings containing four units or more. But landlords will have the opportunity to raise rents up to 6% one time if they haven’t increased rents since May 2020.

Landlords renting to seniors can only go as high as 2.5%, even for the first increase, according to Mitch Kahn, tenant advocate who helped negotiate Montclair’s new ordinance. The Township Council passed the law on second reading on April 19, and it is to go into effect 20 days later. 

Kahn, who has formulated rent control laws for hundreds of towns in New York and New Jersey, said he has been working on rent control in Montclair for nearly 30 years.

“For a very long time, we were not successful. A number of things have happened in this century. Since 2003, the African American population has declined by 30%, primarily due to gentrification and rise in rents, forcing more and more people to move out of town,” Kahn said. 

Montclair Housing Commission chairman William Scott said 60% of Montclair renters would be covered under the new rent stabilization. 

Landlords can increase rents only when leases are up, Kahn said. Tenants who do not have leases or whose leases have expired must receive 30-day notices of any rent increases, he said.

The ordinance would not limit increases for tenants living in newer buildings, as since 2008 New Jersey has prohibited rent control on new buildings for 30 years after the date construction is completed or until after an initial mortgage is amortized, whichever comes first.

In Montclair that pertains to 820 units, and includes Montclair Residences, Valley & Bloom, Montclairian II, Vestry, Westerly, 2 South Willow and the Sienna, according to Scott.

Rent control limits would also not apply to the approximately 750 affordable units in Montclair, which fall under state rules, Scott said.

Limited rate increases of 4%, or 2.5% for seniors, will also apply to parking rentals provided in conjunction with apartment rentals.

Upon vacancy of an apartment, landlords can raise rents with no percentage limits, but no more often than once every five years.

Landlords can also apply to raise rents above the limits due to hardships — when their expenses for a building exceed 65% of the gross income, when they conduct major capital improvements or when they add major additional services.

According to Tenants Organization of Montclair president AhavaFelicidad, if a landlord illegally raised the rent on an existing tenant during the rent freeze, the rent should be rolled back to the rent in existence on the date the freeze went into effect, May 1, 2020. 

“Then the 4% or 2.5% for seniors is applied,” she said. 

Kahn advises renters to notify their landlords of the law and any discrepancies, and credit overcharges toward future rent.

“So they should deduct the overcharge from a future rent payment and the tenant should notify the landlord in writing why they are doing so. I assume that once the rent board is up and running tenants could also file a complaint with the rent control officer,” Kahn said.

Township manager Tim Stafford said for the short-term, a current employee will perform the duties of a rent control officer position created under the new ordinance. A candidate for the role has yet to be selected, he said. The township in 2022 budgeted $125,000 for a rent control officer and other expenses pertaining to rent control enforcement.

The council will also appoint a rent control board, which would meet three times a year, to issue rent control rules, provide information to tenants and landlords on compliance, and to hold hearings on hardship exceptions and appeals of the rent control officer’s decisions. 

Some small property landlords are against what they called a last-minute change to the law — made as tenant advocates and landlords negotiated to avoid a referendum on a 2020 version of rent control that never went into effect — to include the two- and three-unit rental properties. Landlords had petitioned to force the 2020 law to referendum, part of a two-year legal battle that ended with the negotiated deal on a replacement ordinance.

The referendum would have taken place May 10, had a deal to avert it not been struck.  

The 2020 ordinance would have limited annual rent increases to 4.25%, and at 2.5% for seniors, at multifamily properties with four or more units. It limited rent increases on vacancies to 10%, a sticking point for landlords.

That ordinance was repealed on April 18, and the landlords who’d opposed it pulled their petition for a referendum in late March.

About 1,400 buildings in town have two or three units each, according to figures provided by Councilman David Cummings last year. According to the Census Bureau’s American Community Survey for 2020 — the most recent year for which figures were available — there are an estimated 5,501 renter-occupied units in the township.

In a settlement with the township, the landlords also agreed to withdraw a lawsuit seeking to invalidate the separate rent freeze — including past authorizations for the freeze. The settlement includes a negotiated agreement on about $300,000 in court fees the landlords were seeking in court. The landlords agreed to take 40% of that amount — $120,000 — and split it between covering their legal costs and creating a fund for tenants who have experienced temporary setbacks and can’t pay the rent. 

Under that agreement, signed with the landlords on March 28, the negotiated ordinance had to be voted on as-is, but Montclair could amend the ordinance in the future, Councilman Peter Yacobellis has said.

Carmel Loughman — a landlord for a smaller property who has vocally protested the inclusion of two- and three-family homes, started a petition on Change.org requesting that the council immediately amend the ordinance to exclude two-, three- and four- family homes. As of Tuesday, more than 100 people had signed it. Unlike the petition circulated by the landlords in 2020, that online petition has no legal weight and cannot prompt a referendum.

Loughman says that property values for two- and three- family properties will decrease with rent control. 

Landlord-Tenant Advisory Committee chair Deirdre Malloy said that it is the small property owners who have raised rents “unconscionably.” She said the committee, which for years has heard tenants and landlord complaints, received a complaint from a senior tenant residing in a two-family property who received a 20% increase in 2021, and another 20% increase recently. 

Malloy said that until a rent officer is hired and the board set up, the committee will still help tenants and landlords with issues. It can be reached at 973-744-1400 ext. 6055.