Are 20-30 Percent Rent Increases 'Unconscionable'? Hoboken Suit Could Set NJ Precedent

HOBOKEN, NJ — Now that several landlords in Hoboken have levied rent increases of 20 percent or more on longtime tenants, the city of Hoboken has assisted three families in filing a lawsuit against luxury landlord AvalonBay, saying their increases are so high, they may run afoul of New Jersey law.

The outcome of the case may help answer an oft-debated question about how high landlords in New Jersey can raise the rent on existing tenants.

The suit, filed in Hudson County Superior Court on June 9, notes that three different families in the Hoboken Avalon complex have children in various Hoboken public schools, and thus have set down roots in the community.

But Avalon's unexpected increases — including an increase from $3,990 to $5,826 in two years for a unit occupied by a single mother and child — could force the families to leave, the suit says.

The rents are also so high that they may fall under what the state could consider "unconscionable," the city says.

The increases also may run afoul of Hoboken's local Rent Control Ordinance, which is more restrictive than state law.

What The Laws Say

In New Jersey, there is no specific cap on rent increases, but there are guidelines stating that if a tenant believes the rent has been raised unfairly, he or she can withhold that portion of the rent and await a court date, during which a judge will determine if the rent is "unreasonable or unconscionable."

Local advocates have said that in the past, this amount has been around 25 percent.

Additionally, many apartments in Hoboken fall under local rent control, which limits increases to 5 percent a year, but allows landlords to apply to also divide up tax and water increases among tenants.

While the law mainly applies to units more than 30 years old, it also applies to newer units whose owners didn't properly apply for a state exemption when built.

The city determined earlier this year that Avalon Hoboken did not apply for an exemption from rent control on time when it was built, and thus, the units, no matter how high priced, can only be raised a few percent each year. Sources say Avalon is fighting that determination.

"Plaintiffs request judgment declaring that Defendant’s recent lease renewals given to Plaintiffs demand rent increases that are unconscionable in violation of New Jersey’s Anti-Eviction Act," says the lawsuit, filed by the firm Sobel, Han & Cannon. Partner Andrew Sobel serves as Hoboken's tenant lawyer.

Mayor Bhalla Addresses 'Unscrupulous Landlords'

The city of Hoboken, while not a plaintiff in the lawsuit, sent out a press release on Friday supporting it.

"While the large majority of property owners work with their tenants to offer reasonable rent rates, it is unacceptable for other unscrupulous landlords to line their pockets with unconscionable rent increases at the expense of hardworking Hoboken tenants,” said Mayor Ravi Bhalla Friday.

He added, “I offer my unwavering support to the tenants of the Avalon, who are bravely fighting rent increases far and above what the Avalon management should be, and are even permitted to impose. If left unchallenged, these increases would have the net effect of pricing many residents out of Hoboken."

He said the outcome may "help set the standard through the courts to prevent unconscionable rent increases in Hoboken."

The suit notes that the residents continued paying the rents to maintain stability for their families or even their businesses.

"[The tenant's child] has developed friendships with the children who live in the Avalon Hoboken and her son’s social development and stability are of paramount importance," the suit says of a single mom in the building. "After [her] initial term, she did everything possible to prevent being forced out of the Avalon Hoboken and reluctantly agreed to the 15 percent increase for the second year to maintain stability ... and prevent disruption to her business which she relies on to support herself and [child.]"

But this past June, the suit notes, a new lease offered the mom would raise her rent another $1,236 per month or 26.9 percent, and if she didn't accept it,"her tenancy will automatically become a month-to-month tenancy at a monthly rent of $8,576.00 which would raise the rent by $3,986 per month, representing an 86.8 percent increase."

The suit attempts to answer a question that many have asked statewide: How much is too much of a rent increase? What amount would "shock the conscience?"

While some say the landlords are just raising the rent to what the market will bear, existing tenants may be backed into a corner, forced to consider a higher amount because of the costs of moving or resettling their families.

And an investigation indicated that nationally, several groups of landlords were raising rents at the same time based on computer software, giving tenants few alternatives in their area.

Avalon's management has recently been responding to Google reviews about the rents and frequent pool closures, saying, in one case, "At AvalonBay, we pay very close attention to our apartment pricing in order to keep it in line with the ever-changing market conditions, so we're sorry to hear that you feel we are not meeting the mark for you."

What About Poorer Hoboken Families?

Residents of luxury buildings like Avalon Hoboken and The Rivington have spoken out against recent rent hikes that threatened to destabilize their families — but a local advocacy group pointed out that tenants in smaller buildings need advocacy, too.

Cheryl Fallick of the Hoboken Fair Housing Association pointed to a years-long legal battle that one Hoboken senior citizen has been waging against his landlord. You can contribute to his GoFundMe here.

Resources

Read Hoboken Patch's prior reporting on the Avalon rent issue here.

Read the New Jersey laws about increases, eviction, and Truth in Renting here, here, and here.

Hoboken residents with an issue related to tenancy or housing can contact the city’s
free tenant advocate and schedule an appointment online at https://sobelhancannonllp.simplybook.me/v2/#book. Appointments
are available Monday through Thursday, the city said.

• FURTHER READING: Rents In Jersey City, Hoboken Highest In Country. But Are They Legal?
  
• READ MORE: Rivington Rent Hikes Reduced; Hoboken Says They're An 'Injustice'

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