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S3097 SCU Statement 2/5/26
SENATE COMMUNITY AND URBAN AFFAIRS COMMITTEE
STATEMENT TO
SENATE, No.
3097
with
committee amendments
STATE
OF NEW JERSEY
DATED:
�FEBRUARY
5, 2026
����� The Senate Community and Urban Affairs Committee
reports favorably and with committee amendments Senate Bill No. 3097.
����� As amended and reported, this bill, entitled the
"Protection of Homeownership and Limiting Institutional Investor
Acquisition Act": (1) restricts institutional investor acquisition of
single-family homes and imposes certain tax penalties on acquisition of
single-family homes by institutional investors; (2) provides down payment
assistance and funding for certain homebuyers and developers for the purchase
and development of starter homes; (3) reduces the timeframe for the approval of
development applications to certain municipal government entities, and
expedites starter home inspections; (4) requires the creation of a buyer�s home
purchasing guide and establishment of a public awareness campaign concerning
the impact of institutional investors on the housing market; (5) permits
resident taxpayers who are first-time homebuyers to claim certain gross income
tax deductions; and (6) establishes the "Starter Home Development
Incentive Program" within the New Jersey Economic Development Authority.
Restrictions on Institutional Investor Acquisition of
Single-Family Homes and Imposition of Certain Tax Penalties
:
����� Sections 3 through 6 of the bill prohibit certain
institutional investors from placing a bid on or purchasing a single-family
home, as defined in the bill, during the first 45 days that the home is
available, and subject an institutional investor who owns or acquires a
single-family home to certain taxes.
����� Specifically, the bill prohibits an institutional
investor, as defined in the bill, from contacting the owner of a single-family
home, or the owner�s agent, with respect to the single-family home, or
soliciting, placing a bid on, or inducing an offer for, a single-family home
during the first 45 days that the single-family home is "on the market and
available for purchase," as the term is defined in the bill. �To
discourage circumvention of the bill by institutional investors, the bill
provides that an institutional investor that places a bid on, acquires, or
purchases a single-family home outside of the 45-day period set forth in the
bill is to be subject to an annual State tax in an amount equal to the sum of
certain calculations provided in the bill according to the number of
single-family homes owned by the institutional investor. �The State tax revenue
collected through the tax is to be credited to the New Jersey Housing and
Mortgage Finance Agency (HMFA) to establish new programs or supplement existing
programs that award grants to provide down payment assistance to families
purchasing single-family homes in the State. �The HMFA is to annually publish
on its Internet website the amount of State tax revenue collected pursuant to
the bill. �The bill authorizes the Director of the Division of Taxation
(director) and the Commissioner of Community Affairs (commissioner) to require
institutional investors to report certain information provided in the bill. �The
bill also prohibits an institutional investor from leasing a single-family home
acquired or purchased by the institutional investor for a period of five years
following the date of acquisition or purchase.
����� The bill is not to apply to certain nonprofit
organizations; small institutional investors, as defined in the bill; financial
institutions owning or acquiring a single-family home through foreclosure or
through a secured transaction; institutional investors acting as condemnors;
governmental authorities; an institutional investor that uses capital to
rehabilitate vacant and distressed single-family homes, dependent on certain
conditions; or other institutional investors excepted from the requirements of
the bill by the commissioner.
����� A person or entity, including a small institutional
investor, in the county or vicinage in which the single-family home is located,
may file a complaint in the Superior Court of New Jersey, Law Division, against
an institutional investor that violates the bill. �If the court finds the
institutional investor did violate the bill, the institutional investor is to
alienate the single-family home within six months of the court�s determination,
and any profit received shall be payable to the Attorney General. �In addition,
an amount equal to the profit received is to also be paid to, and
proportionately divided amongst, any person or entity, including a small
institutional investor, adversely and directly affected by a violation, which
is to be construed liberally, who files a complaint in the Superior Court of
New Jersey, Law Division in the county or vicinage in which the single-family
home is located within 24 months of the date that the violation occurred.
����� A violation of the bill is to also constitute an
unlawful practice in violation of the New Jersey consumer fraud act. �Further,
notwithstanding a penalty collected by the Attorney General pursuant to the
bill, the bill permits any person or entity directly and adversely affected by
a violation to file a complaint against an institutional investor in violation
of section 4 of the bill. The complainant is to be permitted to recover
$20,000, or $60,000 if the court finds the institutional investor willfully violated
section 4 of the bill, which is required to be proportionately divided amongst
any person or entity, including a small institutional investor, directly and
adversely affected by a violation who files a complaint within 24 months of the
date that the violation occurred, in addition to certain fees and expenses
incurred in proving a violation of the bill.
����� The bill provides that a court that receives a
complaint against an institutional investor for violation of the bill is to
send administrative notice of the pending action to the institutional investor,
who is to have 60 days from the receipt of the notice to cure the alleged
violation. �If the institutional investor fails to cure, or take substantial
steps to cure, the alleged violation within the 60-day time period, the
penalties in the bill are to apply.
����� This portion of the bill would take effect on the
first day of the sixth month next following the date of enactment, and sections
5 and 6 of the bill would apply to the tax year beginning on or after January 1
following the date of enactment. �This portion of the bill is to expire on the
first day of the sixth year following the date of enactment. �The commissioner
and the director are to issue reports on the effectiveness of the provisions of
these sections and these reports are to be published on their respective
Internet websites.
Down Payment Assistance, Developer Funding, and the
Community Investment Fund:
����� Sections 7 through 11 of the bill provide down payment
assistance and developer funding for the purchase and development of starter
homes and affordable starter homes.
����� The bill modifies a down payment assistance loan
program (loan program), established for the benefit of first-time homebuyers
pursuant to a recently enacted statute, P.L.2023, c.78 (C.55:14K-104 et seq.). �The
bill also modifies the Resilient Home Construction Pilot Program (construction
program), established to provide funding for developers to rehabilitate
existing homes and construct new affordable homes for sale, changing it from a
pilot program to a permanent program in the HMFA. The bill ensures that a
portion of the funding for the loan program and construction program,
respectively, is to be allocated to provide down payment assistance for
first-time homebuyers to purchase starter homes and affordable starter homes,
and funding for developers to construct starter homes and affordable starter
homes, as those terms are defined in the bill by size and formal price control.
����� In addition to the loan awards already offered through
the loan program, the bill authorizes the HMFA to provide an additional
zero-interest, forgivable loan award of up to $5,000 if the first-time
homebuyer provides matching down payment funds in an amount to be determined by
the Executive Director of the HMFA.
����� The bill also establishes a revolving fund in the
HMFA, to be known as the Community Investment Fund, for carrying out the
purposes of the loan program (fund), and permits moneys held in the fund that
are not able to be disbursed immediately to be invested and reinvested.
The bill requires that a portion of the money expended from the fund for the
loan program be used for down payment assistance for first-time homebuyers to
purchase starter homes and affordable starter homes.
����� Sections 7 through 11 of the bill would take effect
immediately.
Shortened Timeframe for Land Use Applications for
Development and Expedited Inspections for Starter Homes
:
����� Sections 12 through 16 of the bill reduce certain
allowed timeframes under the "Municipal Land Use Law," P.L.1975,
c.291 (C.40:55D-1 et seq.) related to the approval of an application for
development, an application for certain site plans, or for an application for
certain subdivisions, if at least 40 percent of the units to be developed,
total acreage, or lots on which residential dwellings are constructed, are to
be used for starter homes.
����� Further, for the inspection of any work related to the
construction or development of a starter home, the bill permits an owner,
agent, or other responsible person in charge of work to contract with and
utilize a private on-site inspection agency authorized by the department to
conduct on-site inspections, and further permits the private on-site inspection
agency to perform any requested inspections related to the development of a
starter home, regardless of whether the enforcing agency is able to perform a
requested inspection within three business days of the date for which the
inspection is requested. �Sections 12 through 16 of the bill would take effect
immediately.
Buyer�s Home Purchasing Guide and Institutional
Investment Impacts Public Awareness Campaign
:
����� Sections 17 and 18 of the bill require the Department
of Banking and Insurance, in consultation with the HMFA and the Department of
Community Affairs, to:
����� (1)� publish and disseminate a buyer�s guide for
individuals who are purchasing a home; and
����� (2)� undertake a public awareness campaign concerning
the impacts of institutional investment in the State housing market and to
promote resources available for homebuyers.
����� Sections 17 and 18 of the bill would take effect
immediately.
Tax Incentives for Individual Homebuyers
:
����� Sections 19 through 22 of the bill permit resident
taxpayers of this State who are first-time home buyers to claim a gross income
tax deduction for certain expenses.
����� Specifically, the bill allows a resident taxpayer who
is a first-time home buyer, as defined in the bill, to claim a gross income tax
deduction for the amount paid by the taxpayer as a down payment for the
purchase of a single-family residence during the taxable year. The bill
also allows a first-time home buyer to claim a gross income tax deduction for
the amount of mortgage interest paid by the taxpayer to an eligible lender
during the taxable year, up to amounts allowable under the federal Internal
Revenue Code, on a single-family residence that is purchased and occupied as
the owner�s primary residence. If applicable, a first-time home buyer
would also be allowed to claim a gross income tax deduction for any mortgage
insurance payments paid by the taxpayer during the taxable year, up to
$3,000.
����� Sections 19 through 22 of the bill would take effect
immediately, and apply to taxable years beginning on or after January 1 of the
year next following enactment.
Tax Disincentives for Business Entities Owning
Single-Family Residences
:
����� Sections 23 and 24 of the bill prohibit certain
business entities from claiming deductions or expenses under the corporation
business tax and gross income tax for depreciation allowances and business
interest expenses related to single family residences owned by the business.
����� Under the bill, a corporation business taxpayer that
owns more than 20 single-family residences, as defined in the bill, during the
privilege period would be required to include the amounts of certain deductions
specified in the bill, if claimed for federal income tax purposes in connection
with a single-family residence owned by the taxpayer, to the taxpayer�s entire
net income for the privilege period. The bill also prohibits the taxpayer
from claiming a deduction for depreciation in relation to single-family
residence ownership.
����� Additionally, business interest expenses and
depreciation deductions related to single family residences owned by certain
pass-through business entities, which own more than 20 single-family
residences, are not to be included in the calculation of the various categories
of business income, which are calculated net of expenses. As a result,
the taxable income generated by these business entities would not be reduced
based on these expenses and deductions.
����� Sections 23 and 24 of the bill would take effect
immediately, and apply to privilege periods and taxable years beginning on or
after the January 1 following the date of enactment.
Starter Home Development Incentive Program
:
����� Sections 25 through 28 of the bill establish the
"Starter Home Development Incentive Program" (incentive program)
within the New Jersey Economic Development Authority (EDA).
����� The purpose of the incentive program is to attract
developer investment in the development of starter homes in the State.
Under the bill, "starter home" means a unit of single-family housing
that consists of not more than 1,800 square feet of floor area. �The bill
defines a "single-family home" as a one- to four-family residence, a
condominium unit, or a cooperative unit.
����� Under the program, the EDA would provide tax credits
to eligible developers, following the approval of an application by the EDA. �Eligible
projects would include projects that primarily include the construction or
rehabilitation of one or more starter homes. Under the bill, projects
that include at least 10 starter homes would receive a tax credit in the amount
of 30 percent of the developer�s eligible project costs, whereas projects that
include less than 10 starter homes would receive a tax credit in the amount of
20 percent of the developer�s eligible project costs. Under the bill,
"eligible project costs" means the costs to complete the development
of an eligible project, which costs are eligible for subsidy pursuant to the
federal Low Income Housing Tax Credit Program, and which costs are incurred by
a developer before the issuance of a permanent certificate of occupancy for the
eligible project, or before such other time specified by the EDA.
����� The bill provides that an eligible developer that
executes an incentive award agreement with the EDA may receive tax credits as
authorized under the agreement, subject to the approval of annual compliance
reports submitted by the developer to the EDA.
����������� After issuance of the certificate of compliance
by the EDA, the taxpayer would be permitted to claim the tax credit. Any
amount of tax credit that cannot be used on a tax period may be carried forward
for use in the seven tax periods following the period for which the credit was
issued. �The bill also allows a taxpayer to apply for a tax credit transfer
certificate so that all or part of the credit awarded may be sold or assigned
to a third-party purchaser, as provided for in the bill.
����� Sections 25 through 28 of the bill would take effect
immediately.
����� This bill was prefiled for introduction in the
2026-2027 session pending technical review.� As reported, the bill includes the
changes required by technical review, which has been performed.
COMMITTEE AMENDMENTS
:
����� The committee amendments decrease from 90 days to 45
days the amount of time certain institutional investors are prohibited from
placing a bid on or purchasing a single-family home when the home is on the
market and available for purchase.� The committee amendments also add
condominium units and cooperative units to the definition of
"single-family home" in section 3 of the bill, and establishes
definitions for "condominium" and "cooperative" in sections
3 and 25 of the bill, consistent with other provisions of current law.