3 Big Problems with Rent Control And A Property Management Alternative

John Triplett's picture
Rent control is one of the issues protesters have pushed in Portland

The newspaper in Bend, Oregon, has a strong editorial setting out the “perils of rent control” which is being considered by some in the legislature in Oregon.Meanwhile a landlord and property management organization has proposed an alternative plan.

The editorial does a nice job setting out the 3 big problems with rent control:

  1. It tends to drive money out of the rental housing market. If a builder cannot charge what he believes his building is worth, he’ll put his money elsewhere. That’s true for even expensive buildings that are not subject to rent control laws. There, economists note, potential landlords worry that someday controls will apply to them, too, and so go elsewhere.
  2. Owners of existing buildings, meanwhile, can find themselves with repairs and maintenance needs they cannot afford to pay for, meaning the quality of rent-controlled housing declines. Rent controls have proven themselves an effective way to lower the quality of the housing to which they’re applied.
  3. Rent control also holds landlords responsible for Oregon’s affordable housing challenges. That’s just not fair. Depending on how rent control is structured, it can also help people who don’t need help.

An alternative proposal by landlords to avoid rent control

A group representing landlords, Multifamily Northwest, has proposed an alternative to rent controls called the Oregon Renter Assistance program.

The proposal involves a $25 million per annum state-managed fund allocated to provide temporary assistance to more than 20,000 Oregon renters struggling to meet rent payments.

The fund would provide temporary assistance – up to two years – to tenants who need help in making their rent payments and would be modeled after a federal Section 8 program in that it would be available to those with a proven history of no rental defaults.

“Our organization opposes rent control and the removal of tools building owners and managers need to maintain safe communities,  Multifamily NW’s attorney, John DiLorenzo, said in the release. “But we also recognize that many renters feel they are being priced out of the market by increasing rents caused by a limited supply of housing in our state, so we’ve developed this program to help tenants navigate through the current imbalance between supply and demand.”

Highlights of how the fund would work:

  • Landlords would enter agreements with the state to accept payments; these payments would supplement rental payments, which the tenants could otherwise afford.
  • The state would contract with a variety of nonprofit organizations to serve as confidential third-party evaluators to determine eligibility for monthly assistance. Nonprofit organizations selected would apply HUD or other criteria to applicants, evaluate their pay stubs, bank balances and other factors to determine need, and make decisions as to which applicants were eligible for assistance.
  • Assuming the typical temporary assistance would be as much as $100/month, the state could assist more than 20,000 persons per year with this program, which would allocate $25 million each year to help tenants meet rent payments (for up to two years), according to the release.

“Through this proposal we’ve found an area where landlord and tenant interests are aligned,” DiLorenzo said in the release. “And the Oregon Renter Assistance Fund would be a cost-effec=ve mechanism for helping a significant number of people stay in their homes.”

Oregon Democratic House Speaker Tina Kotek, who supports rent control, told Willamette Week the landlords’ proposal was a “taxpayer funded giveaway.”

The proposal by Multifamily NW comes after Kotek announced her support for overturning the state's ban on rent control and ending "no-cause" evictions.

Kotek dismissed the offer of common ground from the landlords as a "deliberate attempt to mislead."

Economist Joe Cortright told the newspaper he gave the landlords' proposal mixed reviews, calling it a "broader-based way of addressing the affordability issue" than inclusionary zoning, the city's housing bond or rent control, but one that would, nonetheless, result in higher rents across the market.

Resources:

The Bend Bulletin and the perils

Multifamily northwest proposes rental assistance program

Landlords support rent assistance in face of Oregon leader’s opposition

Oregon landlords propose $25 million annual program to assist renters

Please see related stories:

Landlord, property managers, bullied and harassed over rent increase

The housing crisis is a problem the city helped create

 

Keep up with rent control issues and landlords with our weekly email newsletter

Rate this article: 
Average: 5 (1 vote)