Landlords Fight City’s New Rental Fee Ordinance

by | Jan 24, 2011 | Rental Property Management Tips

At the same time the economy has squeezed landlords’ profit margins and widespread unemployment has temporarily stifled rent increases, local governments are looking at ways to buffer their own budget shortfalls.  And sometimes, the two interests collide.

Take for example Freehold Borough in New Jersey.  Eight years ago, the city created an annual licensing fee for rental properties.  While there was some grumbling amongst landlords over the measure, it was not until last year– when the Borough raised the fees to $600, that landlords really took issue with the plan.

In addition to paying the fee, landlords are required to submit a registration form, that includes detailed information — including name, age and gender of occupants, including children.  Any changes in occupants or in the structure of the building must be reported.  Failure to comply can result in fines as high as $1,250.

Borough officials say the fees are necessary to beef up the code enforcement department. Given that somewhere between 20-25% of properties there are rentals, the fees are estimated to bring in a minimum of $200,000 annually. 

Landlords, on the other hand, express dismay, not only over the size of the fees, but that good landlords are being penalized along with the bad.  Tenants, likewise, are concerned the increased fees will lead to rent increases in the area — something they simply can’t afford right now.

Over the objections, the Borough Council passed the increase, effective early 2010.

In response, a group of landlords formed the Freehold Landlord Association of New Jersey, and hired a trial lawyer to fight the ordinance. 

In a prepared statement, FLANJ explains “By continuing to violate the Constitutional Rights of both tenants and property owners through the passage of the most recent incarnation of rental property regulations and by their failure to enter into a constructive dialogue with over a quarter of the Borough’s property owners, the Mayor and Council have chosen conflict over cooperation and have exposed all taxpayers to financial harm by their failure to follow the law. The Freehold Landlord Association of New Jersey is saddened that the Mayor and Council have chosen to have these matters resolved in a Monmouth County courtroom instead of a Freehold Borough conference room.”

Whether over concerns from the lawsuit or by coincidence, the Borough voluntarily amended the licensing ordinance, effectively lowering the fees to $300 per year, and agreeing to protect the names of tenants’ children in the registration forms. The amendment still represents an increase in fees over earlier years because the original measure provided for declining fees in subsequent years.

Despite the latest amendment,  FLANJ remains committed to overturning the ordinance as unconstitutional.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).Landlord Credit Reports.Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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