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Housing
Your Rights Around Rent Increases

What are your rights when your rent is increased?

Tenants often ask if they have any rights when the landlord asks for a rent increase, especially if their landlord has raised the rent in the past and the tenant is at the point where he or she can no longer afford to pay any more. The answer to this question is yes. As this section explains, landlords can only increase the rent if they follow the correct procedure to end the lease at the old rent and create a new lease at the increased rent. A landlord also cannot ask for a rent increase that is unconscionable. If the tenant lives in a community with rent control, the rent increase cannot exceed the amount allowed under the rent control ordinance.

The correct way to increase the rent

The law requires a landlord to take certain steps in order to make you pay an increase in rent. First, your existing lease at your present rent has to end. This means that the landlord cannot increase the rent during your lease. For example, if you have a lease for a one-year period, the rent cannot be increased during the period of the lease. To raise the rent, the landlord has to wait until your lease is about to expire and then take action to end your lease.

Second, the landlord has to offer you the option of entering into a new lease after the old lease expires. This new lease may be at a higher rent. The next section describes how a landlord must end your lease and offer you a new lease at a higher rent.

Notice terminating lease and notice of rent increase

The law requires that, for a landlord to raise your rent, you must be given proper written notice. A proper notice must inform the tenant that the current written or oral lease is being ended and that the tenant can stay in the rental unit by signing a new lease at a higher rent. (See The correct way to increase the rent.)  

If your lease is monthly, a proper notice must explain that your existing lease will be terminated or ended in one full calendar month. You must receive this notice at least one month before your lease ends. The notice period may be greater, depending on what your current lease says. If your lease is for one year, the notice must explain that your lease will terminate on the date the lease ends, and you must receive this notice at least one month before that date. The notice can be for a longer period, such as 90 days before the lease is to end, if the lease requires it.  

In addition to ending the lease, the notice must also say that, at the end of your current lease, you have the choice of accepting a new lease at the higher rent. If you decide to sign the lease and stay on as a tenant, you must pay the rent increase. Cite: Harry’s Village, Inc. v. Egg Harbor Tp., 89 N.J. 576 (1982).  

Any notice of a rent increase that is not in writing and is not divided into two parts—(1) ending the old lease and (2) beginning a new lease at a higher rent—is not legal, and you do not have to pay the increase.  

If you don’t pay the increase

If the landlord asks for a rent increase, and you decide to stay but not pay the increase, you are not agreeing to the increase. You should be aware that, if you do this, the landlord can try to evict you in court under the Anti-Eviction Act. The law allows landlords to evict tenants for nonpayment of a rent increase. Cite: N.J.S.A. 2A:18-61.1(f). (See the section, The Causes For Eviction.)  

In court, you can argue to the judge that the landlord did not give you proper notice and therefore you do not have to pay the increase until the landlord has given you the right notice.

If you succeed with this argument, the judge will dismiss the eviction complaint. The judge could also find that the landlord gave you the proper notice of a rent increase. This means that, unless the increase is “unconscionable” or in excess of the amount allowed by rent control, you will be evicted unless you pay the increase. Cite: N.J.S.A. 2A:18-61.1(f). (See Unconscionable rent increases below.)

Unconscionable rent increases

Under the Anti-Eviction Act, a landlord cannot make you pay an increase in rent that is so large that it is unconscionable, meaning that it is extremely harsh or so unreasonable as to be shocking. Unconscionability is not important to tenants if the apartment, house, or mobile home is covered by a rent control ordinance adopted by the city or township. In that situation, rent control limits the amount of the rent increase. Also, if you live in subsidized housing, or receive Section 8, federal law will determine how much your rent can be increased. In all other cases, the only protection you have is that the statute states that the rent increase cannot be unconscionable. Cite: N.J.S.A. 2A:18-61.1(f).

Whether an increase is unconscionable depends on the facts of each case. The eviction law does not state what makes an increase unconscionable. In deciding disputes between tenants and their landlords over rent increases, judges have not defined how large an increase must be in dollars or percentages to be unconscionable. It is clear that some rent increases are unconscionable because the increase is much larger than the prior rent, or because the landlord has asked for many small increases in a short period of time that all add up to a large increase. For example, an increase of over 20 percent, if made by the landlord without a very good reason, could be unconscionable. Even a five percent increase could be unconscionable if the conditions in the building are very bad and the landlord has failed to make needed repairs.

If you believe that the rent increase your landlord is asking for may be unconscionable, you can refuse to pay the increase. Your landlord can then take you to court to try to evict you for nonpayment of the rent increase. If the notice ending your lease and increasing your rent is proper, then you can defend against the increase in court by arguing that the increase is unconscionable.

Burden of proof

If the landlord takes you to court, it will be up to the judge to decide if the increase is unconscionable and if you have to pay the increase or be evicted. The burden of proof is on the landlord to show that the rent increase is fair and not unconscionable. Cite: Fromet Properties, Inc. v. Buel, 294 N.J. Super. 601 (App. Div. 1996). If the landlord is not prepared to prove that the increase is fair when the matter is scheduled for trial, the court can grant an adjournment (postponement) in the interest of justice.

In eviction cases, tenants are not allowed to examine the landlord’s books or documents before the trial. Problems will arise if a landlord comes to court with detailed records that a tenant has never seen and may want to challenge. If this happens, the tenant should ask for an adjournment in order to have time to review the landlord’s documents. In a complicated case, the tenant may also ask the court to transfer the matter to a different court—the Law Division of the Superior Court—in order to review the landlord’s records and challenge them through legal procedures such as discovery.

What does the landlord have to prove?

The judge should require the landlord to show that the large increase sought is justified because his expenses are more than his rental income, or that he is making an insufficient profit. Other factors that the court may look at in deciding whether a rent increase is fair and not unconscionable are:

  • The amount of the proposed rent increase.
  • How the existing and proposed rents compare to rents charged at similar rental properties in the same geographic area.
  • The relative bargaining position of the parties—who has the most power in determining what should be a fair rental.
  • Based on the court’s general knowledge, whether or not the proposed rent increase would “shock the conscience of a reasonable person.” Cite: Fromet Properties, Inc. v. Buel, 294 N.J. Super. 601 (App. Div. 1996). There also may be other factors that courts will examine.

For example, if a landlord claims heavy expenses due to repairs, the landlord should be required to show that improvements were made to the rental units or the building and that these improvements mean better living conditions for tenants. Also, if a landlord spends a lot of money to make a major repair that will last for many years—such as replacing the entire roof of the building or buying all new refrigerators—the tenants should not have to pay the entire cost of the repair in a single rent increase. The increase should be spread out over the life of the repair. (For example, if a landlord spends $15,000 to replace a roof, and the new roof will last 15 years, the rent increase passed on to all the tenants should only be for $1,000 total, since the tenants will be paying that amount each year for the next 15 years.)

A landlord should not be allowed to charge tenants for improvements that the landlord had to make to bring the building into compliance with housing and health codes. Tenants have a right to safe and decent housing and should not be penalized simply because a present or former landlord did not make repairs to the building. Cite: Orange Taxpayers Council, Inc. v. Orange, 83 N.J. 246 (1980).

Some judges do not, however, take these factors into account when ruling on whether a rent increase is unconscionable. Instead, there are judges who believe that landlords can double or triple the rent simply by showing that other apartments in the area are renting for a similar amount.

Once the landlord tries to prove that the rent increase is fair and not unconscionable, a tenant can dispute the accuracy of the landlord’s statements and try to show that the increase simply is not fair.

Increases under rent control

Rent increases are also limited to the amounts allowed under a local rent control ordinance if the community has adopted rent control and the rental unit is covered by rent control. More than 100 cities and townships in New Jersey have passed rent control ordinances. To find out if your city or township has rent control and if it covers your unit, you should call your city or township hall. If there is rent control where you live, they will put you in touch with the person in charge of rent control cases. You can then ask for information about your situation and for a copy of the city’s or town’s rent control ordinance. The ordinance will state how much and how often your rent can be raised.

There are two types of rent increases allowed by most rent control ordinances. First, the ordinances allow landlords to automatically increase the rent by a certain percentage each year. This is called the annual increase. Second, the ordinances allow landlords to apply to the rent control board for an increase above the annual amount. This is called a hardship increase.

Hardship increases

Rent control ordinances allow landlords to apply to the rent control board for a hardship increase. A hardship increase is an additional increase, beyond the regular annual increase, if the landlord is not making a “fair rate of return” or “fair return.” However, courts have said that towns can limit the landlord’s profits to amounts that are fair even if the profits are less than the landlord wants, or less than the landlord could get by investing money elsewhere.

Most rent control ordinances use a formula to determine fair return. These formulas vary. Some fair return formulas are easier to understand than others, and some are more fair to tenants. Check your rent control ordinance for the fair return formula used in your community.

Tenants must be notified if the landlord applies for a hardship increase. The rent control board will then hold a public hearing on the landlord’s request and, after the hearing, make a decision on the request. The rent control hearing gives tenants a chance to contest the rent increase sought in the application.

If you receive notice that your landlord is applying for a hardship increase, there are several steps you can take. You should immediately contact your rent control board and ask them for (1) a copy of the ordinance, (2) a copy of the landlord’s application for a hardship increase, and (3) information on when the hearing on the hardship increase will be held by the rent control board. Many ordinances also provide tenants with the right to look at all of the landlord’s books and records. You may also want to seek the advice of an attorney and get any help you can from the tenants organization in your building, complex, or community.

Challenging a hardship increase

At the hearing on a request for a hardship increase, the landlord will try to show why he or she should get the increase, and you have the chance to argue against the increase. To defeat the hardship application, you must show that the landlord should not recover some of the costs being claimed. This means that you must carefully go through the hardship application and examine each item to make sure that it is fair and reasonable. You should also make sure that the landlord is properly reporting all of his income. For example, you should challenge any cost the landlord is not entitled to recover under the ordinance, or any cost that appears inflated or false, or any cost that is unreasonable or too high, such as the cost of bank financing.

Your aim is to convince the rent control board that the landlord is not suffering hardship and that he or she should not get all or part of the requested increase. The rent board’s decision can be appealed to the Superior Court, Law Division.

Illegal rents under rent control

If you find out that your rent is higher than the legal rent set by the rent control ordinance, you should contact your rent control board. You can file a complaint with the rent control board to get the rent lowered to the correct amount and to recover the amount of illegal rent you paid. Contact your regional Legal Services program, a private attorney, or your local tenants organization for help. You can also get your overpayment back by taking it out of future rent payments. Cite: Chau v. Cardillo, 250 N.J. Super. 378 (App. Div. 1990).

Rent increases due to condo or co-op conversions

Landlords may not be allowed to include in a hardship increase any costs that result from a planned conversion of the building to a condominium or cooperative. For example, one court has ruled that where a building had its property taxes doubled when it was converted into a cooperative, the rent control board was justified in not allowing the increase. The court also ruled that the Anti-Eviction Act requires that tenants who choose not to buy ownership in a condo or co-op be protected against conversion-related rent increases. Cite: Litt v. Rutherford Rent Board, 196 N.J. Super. 456 (Law Div. 1984).

Increases to retaliate or get even

The law does not allow your landlord to increase your rent in order to “get even” with you because you are using your legal rights as a tenant, or because you have reported housing and health code violations to official inspectors, or because you belong to a tenants organization. Cite: N.J.S.A. 2A:42-10.10. (See Defenses to Eviction.)

10/27/2011