Assembly committee advances bill to tax unproductive institutional-owned residential properties

Assemblywoman Flynn called the housing shortage in New Jersey a “real crisis” as the Assembly Housing Committee advanced A5424, a bill that would impose an annual fee on institutional investors who own vacant or abandoned residential properties that are deemed unproductive.

The bill, sponsored in committee as A5424, would require an institutional investor that holds unproductive residential properties to pay a fee equal to $30,000 multiplied by the number of subject properties owned as of the last day of the calendar year, with proceeds paid to the Department of Community Affairs (DCA). The stated goal is to discourage long-term holding of unused residential units and expand available housing stock.

Committee members and witnesses framed the measure as part of a broader effort to increase housing supply. "Our housing stock has not [kept pace]...the rise of institutional investors in the housing market has become a substantial factor impacting the reductions in our housing supply," Assemblywoman Flynn said during opening remarks. The bill’s synopsis was read into the record by committee staff before testimony.

Jeff Kulikowski of the New Jersey Builders Association testified he supported the intent but asked for technical timeframes and implementation details. "It's a newer bill. I haven't had a chance to fully dissect it and understand all of the complexities," Kulikowski said, urging further discussion on how development timelines and permit delays could affect whether a property should be considered ‘unproductive.’

Vice Chair Moen and other committee members described similar concerns and policy alternatives. Moen noted the problem in cities like Paterson where investors have purchased multiunit homes and held them off the owner-occupant market, saying such practices have changed neighborhood dynamics and reduced homeownership opportunities for local workers.

Committee discussion touched on whether the fee should be annual or one-time; a committee member asked for clarification during the hearing, and the committee recorded an answer on the floor that the fee was intended as annual for the bill as presented.

On a motion to release A5424 from committee, the committee voted to advance the bill. The committee recorded yes votes from Assemblywoman Flynn, Assemblyman Clifton, Assemblywoman Keanu, Assemblyman Abdel Aziz, Vice Chairman Millan, and Chair Lopez; the motion passed and the bill was released for further consideration.

The measure advances without finalized technical language on exemptions for properties undergoing permitted redevelopment, a point witnesses asked the committee to address in subsequent drafting.

The committee recessed to the next item after releasing the bill.