Corporations Own Most Of Newark’s Homes. New Laws Are Pushing Back

NEWARK, NJ — It wasn’t long ago that a study from the Rutgers Center on Law, Inequality and Metropolitan Equity made a startling claim about home ownership in New Jersey’s largest city: nearly half of Newark’s residential properties are owned by corporations.

Researchers said the phenomenon is one of the leading reasons behind the rising cost of rental housing in the area. But according to Mayor Ras Baraka, action is being taken on one of the longest-running sources of wealth inequality in the Brick City. Read More: Who Owns Newark? City Fights Back Against Corporate Home Buying Spree

Affordable housing has been a perennial hot-button issue in Newark, where many residents and activists have been complaining about the high cost of living for years.

• See related: An American Dream, Deferred? Home Ownership Out Of Reach For Newarkers
• See related: NJ Protesters Decry Poverty, Lack Of Housing At MTV Awards In Newark

On Thursday, Baraka detailed several ways that city officials have been fighting to keep housing affordable. They include the creation of new local ordinances, rolling out programs for first-time homeowners, and establishing a municipal “land bank” that helps turn abandoned properties into homes for local residents.

“In cities and even suburbs across America, limited liability companies (LLCs) are eroding the American dream of homeownership as they convert owner-occupied homes into corporately owned rental units,” Baraka said.

“In Newark, where we have worked hard to expand homeownership, we have created a strategy to do everything possible to fight this dangerous trend,” he continued.

LOCAL LAWS

The city’s latest ordinance – greenlighted by the municipal council on Wednesday evening – is a direct recommendation from the Rutgers report, Baraka said.

The law imposes deed restrictions on sales of up to 50 percent of city-owned properties, requiring them to remain affordable for 30 years. The restrictions apply to the sale of vacant lots as well as homes, and to the sale of properties by the Newark Land Bank as well as direct sales by the City of Newark.

The measure also gives certified nonprofit housing developers the right of first refusal in the purchase of city-owned properties, according to a statement from the mayor’s office. Read its full text here.

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The ordinance passed Wednesday is the second recent local law that has sought to clamp down on the purchase of owner-occupied homes by “institutional investors” who may value profit over people, Baraka’s office said.

In 2022, the council passed an ordinance to bring more transparency and accountability to limited liability companies who are purchasing private properties in Newark. Now, they must register a “responsible agent” in the state of New Jersey to handle all legal matters, and can no longer hide behind their LLC status to remain anonymous and unreachable.

But those aren’t the only local laws to keep an eye on, Baraka added.

According to the mayor, an ordinance will be introduced in the municipal council in February, which will cover properties not under rent control. If passed, it will impose fees on renting and landlord registrations for property owners and landlords who increase rents above five percent year over year. These fees will be used to fund the creation of new affordable rental and homeownership opportunities for Newark residents.

• See related: Newark Sees Huge Increase In Rent Controlled Home Registrations

CREATING AFFORDABLE HOUSING

Baraka said the city has made other moves to boost affordable housing and home ownership in the recent past. They include:

• Doubling the Live Newark Program to help residents become first-time homebuyers
• Implementing the Neighborhood Development Program, which turns city-owned land into residential and affordable housing
• Allocating a $20 million investment to create housing affordable to residents at a $34,000 income level
• Using Land Bank properties to create Section 8 homeownership opportunities
• Creating the New Jersey 40 Acres and a Mule Fund (NJ FAM Fund) that will invest $100 million into real estate development and small business development for Black and Latinx partners

In the coming months, Newark residents will hear more details about “Investing in Newark Communities,” a major initiative developed by the city, the Equitable Growth Advisory Commission and a large group of community stakeholders, Baraka said.

The new initiative will include:

• An Acquisition Fund to buy homes on the private market and sell to Newarkers (that LLCs would have purchased)
• A fund to build and renovate homes with Newark Minority/Women-owned Business Enterprise (MWBE) contractors and sell them at affordable prices to Newarkers who will also receive low interest mortgages
• Financial and homeownership counseling for home buyers

Thursday’s announcement from the mayor’s office got a thumbs-up from one of the authors of last year’s CliME report, David Troutt, a Rutgers professor who also serves as a member of Newark’s Equitable Growth Advisory Commission.

“Our report shows that the national trend of investor buying of one-to-four unit homes in predominantly Black neighborhoods is acute in Newark, where almost half of all real estate sales were made by institutional buyers,” Troutt said.

“This trend grew out of the foreclosure crisis that wiped out significant middle-class wealth in Newark,” Troutt added. “Mayor Baraka’s actions are important steps toward maintaining affordability of rents and homeownership, discouraging speculation and demanding transparency of ownership.”

• See related: Bank 'Redlined' NJ Home Buyers In Newark Metro Area, Feds Allege

Newark isn’t the only place in New Jersey that is seeing a big shift in who owns the homes its residents live in, another recent study says.

In December, the New Jersey Department of Community Affairs (DCA) released a report titled “Buying New Jersey: The Rise in Institutional Ownership of Residential Properties.” According to the report, corporations and other “institutional” buyers have been snapping up an increasing number of houses and apartment buildings across the state. Over the past decade, nearly every town and city in New Jersey – about 96.4 percent – has seen an increase in the share of residential properties owned by real estate firms, business entities, trusts and banks.

• See related: Newark Isn't Only NJ City Seeing Rise In Corporate Home Buyers, Report Says

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