Many smaller landlords are compelled to call it quits and get out of town as the more the rental market is regulated, the more “unintended consequences” arise creating more problems.
By Ron Garcia
Rental Housing Alliance Oregon
June is here. The Portland Rose Festival is happening at Waterfront Park. The NBA playoffs, Stanley Cup finals, and Indy Car races are all running at full speed. Golf courses and hiking trails are packed, and rush-hour traffic is at a standstill, exaggerated by summer roadwork and detours. Google calendars are jammed with happy hour events and networking groups and business coffees and lunch appointments. Zoom meetings are now arranged only for their convenience rather than their necessity. Everyone seems to be making vacation plans despite higher gas prices, while real estate values continue to rise.
It could easily lead us to forget that the COVID-19 pandemic ever happened. Except that it did, and it is still threatening, and there are reminders everywhere we turn. Its negative effects linger in cautious handshakes and arise every time someone sneezes in public or stands apart while wearing a mask.
As a landlord, you may still be feeling the throbbing headache of your tenants’ unpaid rent as they continue to be protected under Oregon’s Safe Harbor regulations. Today it’s not uncommon for tenants who had been approved for Emergency Rental Assistance, and who were already paid thousands of dollars for back-owed rent by the state, to still be delinquent either for recent months or for some gap that occurred in 2020 or 2021 that remained uncovered and unpaid by any assistance dollars.
It is frustrating especially to smaller landlords who are straddled with mortgage payments and burdened by a lack of income from their investment property. They are unable to terminate the tenancy to either sell or re-rent the unit and they can’t do much about raising old, below-market rents beyond the small percentages now prescribed by state law.
Many tenants are equally distressed because they have been incentivized by the state to not pay rent. They have fallen behind beyond any amount they might qualify for, even if their applications for assistance get approved. Those dollars are drying up and OHCS announced that the portal has closed. Meantime, the market has tightened up with very few vacancies and higher rents, so tenants are now left with limited alternatives for replacement housing when that day finally comes, and they are forced to pay up.
How did we get here? The more the market is regulated, the more “unintended consequences” arise creating more problems. The pandemic was not the only catalyst creating bad regulations, but it sure piled a lot more of them on! Hello – is anybody home?
One example is a law passed last year called SB 291. It’s a requirement to lower screening guidelines stating that criminal backgrounds should rarely be used as they do not indicate an applicant’s ability to pay rent.
Consider this: When an existing tenant feels threatened by a newer neighbor’s behavior, they are also generally too intimidated to testify against it, thus providing the landlord with little or no ability to terminate the bad actor for cause. So, what happens? The existing neighbor moves out and is now forced to pay a much higher rent for a new unit. Then, what happens to that vacancy? The landlord renovates it and raises its rent, of course, to cover their losses. Is this any way to solve affordable housing issues? Are lawmakers so far removed that they don’t see what is actually happening at home? And even though both the landlord and the existing tenant were each negatively affected by this forced arrangement brought on by a convoluted regulation, some advocates try to use these optics to “prove” that discrimination exists and that the only thing that matters to landlords are higher returns.
Many affordable housing advocates are now using the homeless crisis to demand even more regulation. As they re-brand the problem as “houselessness,” it’s easy to see where they expect to find solutions. Wide-ranging, all-encompassing statutes that claim to defend and protect classes of people who are disproportionality affected and who are rent-burdened due to long-standing social injustices are having the exact opposite effect on the people they claim to be defending.
No wonder so many smaller landlords are compelled to call it quits and get out of town. We need a break!
Affordable and safe housing is paramount to a thriving community. We elect lawmakers to help create solutions to improve the well being of us all. As we collectively relax this summer in our re-opened social endeavors, let’s all agree to write a postcard to our representatives at the state house and tell them our stories of frustration. Maybe let them know that “we wish they were here” to protect us, too.
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