By Sharon Wilson Geno
Our current housing crisis is the result of decades of broken policy and repeated unwillingness to invest needed government resources in housing. The pandemic then drove the cost of housing way up due in large part to dramatic increases in uncontrollable costs, such as insurance and state and local taxes.
Rent control discourages builders from building the amount and the variety of homes needed to keep housing costs in check and upgrading existing homes. Over time, it creates a “worst of both worlds” scenario: It widens the shortage of affordable homes while also causing the existing housing stock to decay and deteriorate.
Moreover, rent control is wildly inequitable. It gives the well-off the same access to rent-controlled apartments as lower-income families who need assistance most. It incentivizes every renter, no matter their income or wealth, to stay in their apartment much longer than they otherwise would, even when their apartment no longer fits their needs. This creates fierce competition for a smaller number of vacant units. Studies shows that rent control supports more upper-income and white renters than those of moderate income and people of color.
This isn’t theoretical; the dynamic has been observed time and again in empirical studies by researchers of all political persuasions.
Read the full article here
By Tim Ballering, RPA Board Member
See the link to the article from Milwaukee Neighborhood News Service Here
Yusuf “Joe” is an impressive guy and an asset to our industry.
The Legislative Committee supports his efforts to repeal the Thurmond Amendment. Crimes committed by a 16-year-old, with the last arrest at 18, should not harm them twenty productive years later.
In addition to being the past president of the Association, Joe is a Princeton Alumnus and, until this summer, the Director of the Dyer School for Innovation and Entrepreneurship at Lafayette College, PA. He runs the Real Estate Lab in Allenton.
Here are links to his Prison to Princeton and TED talk videos. They are short and worth viewing.
By Dawn Anastasi, RPA Board Member
Note: RPA does not offer financial advice. All suggestions or ideas noted in this article should be discussed with a financial professional, such as a CPA or financial advisor.
Did your teenagers work for you this summer helping out with your rental properties? Do they help out during the year on weekends? If you pay them, consider allowing them to capitalize on the greatest money-making asset they have -- TIME.
“The greatest money-making asset any person can possess is time, and young people have more of it than anyone,” said Ed Slott, an IRA expert and certified public accountant.
Post-tax earned income can be used to make Roth IRA contributions. Roth IRA contributions can be withdrawn before retirement, tax and penalty free.
Eligibility to contribute to a Roth IRA also generally depends on how much you earn. Since workers may no longer qualify for Roth IRAs later in their careers when their incomes are higher, that also makes it advantageous to get started with these accounts early.
Read More in this Article
Keep in mind that self-directed Roth IRAs can also be used to invest in real estate or other assets outside of traditional stocks and bonds -- for example:
With the recent discussion from the government about implementing rent control on a federal level, there's been some articles and discussion refuting that this would be a good idea.
Here is a fantastic article about how Rent Control would not work in the long term and why:
Rent Control Recidivism
Here are some excerpts:
Rent control undermines landlords’ incentives to provide the services tenants want, because it denies landlords the ability to receive adequate compensation to make their efforts worthwhile.
There seems to be a mistaken belief in some circles that 100% of the rent collected by a property owner goes into that owner's pocket. This ignores all the expenses that go into running a property, which include property taxes, insurance, routine maintenance, lawn care, utilities, etc.
Anyone who does a non-volunteer job generally expects to be paid. Rental property owners are no exception.
But as Swedish economist Assar Lindbeck asserted, “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.”
The article highlights the three key points why Rent Control is a mistake:
By Attorney Heiner Giese
The attached is a comment submitted to the Federal Housing Finance Administration by Goodman Real Estate, owner of a 254 unit low income housing building in Seattle.
It is very succinct -- readable charts showing how a formerly profitable building declined dramatically from 2018 to 2022 due to various "tenant friendly" laws passed by the State of Washington and the City of Seattle.
Attachment
I submitted the following comment on behalf of the RPA to the Federal Housing Finance Administration's Request for Input (RFI) regarding the creation of tenant protections at multifamily properties with FHFA-backed mortgages:
The attached two files are a comprehensive study of all 1,101 residential eviction actions filed in Milwaukee County, Wisconsin in December 2019. The study was published in March 2022 with December 2019 being selected because it was the last month without the need to consider the effects of the Covid-19 pandemic.
The study confirms much academic and other research which establishes that well over 90% of all evictions are filed due to nonpayment of rent. The study refutes a misleading narrative that evictions are often filed for $500 or less of rent delinquencies. Conversely, our study shows $1,436 as the average amount requested in an eviction complaint and $2,672 as the average judgment granted for lost rent and damages.
The study refers to other research which refutes the narrative about Milwaukee landlord “Sherrena” presented in Matthew Desmond’s widely read book EVICTED. Desmond asserted that this landlord renting to low income tenants was operating a very lucrative rental property business. However, she had brought over 70 evictions and actually lost all 18 of her properties to mortgage and tax foreclosures.
Any measure of increased tenant protections must consider that lengthening the time a nonpaying tenant can stay in a property will increase costs and result in higher rents to other low income tenants.
RPA Eviction Study
Compiled by Dawn Anastasi, RPA Board Member
St. Petersburg, FL -- Effective July 1, a new Florida law forbids municipalities from regulating tenant-landlord relationships, including ordinances that carve out stronger protections for renters. St. Petersburg officials recently began the process of repealing its own Tenant Bill of Rights to comply with state law.
Los Angeles, CA -- LA tenants have until August 1 to pay 18 months of back rent.
Daniel Yukelson, executive director of the Apartment Association of Greater Los Angeles, said tenants have known for nearly three years they would need to repay back rent.
“During that entire time, some have not made any attempts to repay their obligations, and simply have waited around for some miracle to make a large, lump sum payment, which they are unlikely able to do,” Yukelson told the Daily News in an email. “It is time for the city of Los Angeles to stop babysitting these adults.”
Jersey City, NJ -- A group of landlords wants to overturn Jersey City’s “right-to-counsel” legislation, which would provide free lawyers to renters facing eviction by 2025.
The Jersey City Council passed a pair of ordinances last month guaranteeing low-income tenants free legal representation in housing court, using future developers’ fees to pay for it. On Wednesday, the Jersey City Property Owners’ Association sued the city, claiming the new rules exceeded the city’s taxing authority and its municipal powers conferred by the state.
“It’s a tremendous intrusion into private contractual rights,” said Charles Gormally, an attorney representing the association.
The civil complaint was filed in Hudson County Superior Court and alleges the city is creating a new form of taxation that only benefits a group of private residents: tenants who make 80% or less of the area's median income and are eligible for free counsel.
On July 13, 2023, legislators in the U.S. House of Representatives reintroduced the Choice in Affordable Housing Act (H.R.4606).
If enacted, the bill would:
Full Article from the National Apartment Association
See the full article here: White House Press Release
Today, President Biden is announcing a new front in his crackdown on junk fees: rental housing. From repeated rental application fees to surprise “convenience fees,” millions of families incur burdensome costs in the rental application process and throughout the duration of their lease.
These fees are often more than the actual cost of providing the service, or are added onto rents to cover services that renters assume are included—or that they don’t even want.
Today, the President will outline several new, concrete steps in the Administration’s effort to crack down on rental junk fees and lower costs for renters, including:
These companies are making the following announcements:
Zillow is today launching a Cost of Renting Summary on its active apartment listings, empowering the 28 million unique monthly users on its rental platform with clear information on the cost of renting. This new tool will enable renters to easily find out the total cost of renting an apartment from the outset, including all monthly costs and one-time costs, like security deposits and application fees.
Apartments.com is announcing that this year it will launch a new calculator on its platform that will help renters determine the all-in price of a desired unit. This will include all up-front costs as well as recurring monthly rents and fees. The Apartments.com Network currently lists almost 1.5 million active availabilities across more than 385,000 properties.
AffordableHousing.com, the nation’s largest online platform dedicated solely to affordable housing, will require owners to disclose all refundable and non-refundable fees and charges upfront in their listings. It will launch a new “Trusted Owner” badge that protects renters from being charged junk fees by identifying owners who have a history of adhering to best practices, including commitment to reasonable fee limits, no junk fees, and full fee disclosure.
On May 30, the Federal Housing Finance Agency (FHFA) issued a Request for Input on tenant protections. This exercise could result in the adoption of a range of negative policies including national rent control, a “source of income” mandate requiring acceptance of Section 8 vouchers, just cause eviction requirements that effectively prohibit nonrenewals, and extended notice procedures for residents in federally-backed properties, to name a few.
As the FHFA considers expanding federal landlord and tenant requirements on Fannie Mae and Freddie Mac-backed properties, it is essential for members of the rental housing industry like you to provide perspective about your business practices.
The feedback FHFA receives will inform their future decision-making, so it is critical that the agency hears directly from our industry. This is your chance to engage directly to protect your business and your communities from potential harmful policies!
The deadline to submit comments is July 31.
Take action TODAY!
BECOME A MEMBER - JOIN TODAY!
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