ALLENTOWN, Pa. – Allentown City Council voted Wednesday to adopt an ordinance to increase the realty transfer tax by 0.5% for the purpose of raising funds to deal with issues related to housing.
The current rate is 2%, which has remained unchanged for about 50 years.
In November 2024, voters passed a referendum to allow council, through an ordinance, to remove a cap in the home rule charter which had been placed on the deed transfer tax.
Councilmember Santo Napoli said he introduced the legislation after realizing how investors were acquiring real estate in the city.
“And at that time (2024), the percentages that I came up with were 44%,” Napoli said. “Our finance department did a deeper dive in over 18 months, and they came in at 48% as an average.”
“So, the fear of investors acquiring this much real estate and squeezing out Allentown residents was a huge concern,” he said. “Investors, as you know, come to the table with all-cash offers, and we have inspections, fast settlements, and that entices sellers to sell to them instead of homeowners.”
“And meanwhile, Allentown residents are stuck renting instead of acquiring home ownership and building generational wealth,” Napoli added. “So, one of the thoughts I had was that too many rentals also has a negative effect on quality of life and public safety. This legislation tonight is an opportunity to level the playing field for our residents.”
Napoli stressed that the legislation will not impact current homeowners in the city or anyone on a fixed income.
Napoli said the transfer tax increase will bring in approximately $3.2 million a year.
“Most importantly, all the funds received from this 0.5% increase exclusively goes into a housing fund under our [community and economic development] department, and that fund is going to be tasked with addressing housing initiatives in the city,” Napoli said.