Friday, February 10, 2017

Seattle caps move-in fees in attempt to abate affordable housing crisis

Effective January 15, the Seattle City Council approved legislation capping move-in fees at the first months rent plus no more than that for any move-in related deposits.  Renters will be able to opt for payment of move-in costs above this (such as last months rent deposit) over a 6 month payment plan. 

Historically, landlords could charge security deposit, last months rent and pet deposit  fees up front before a tenant could move in. Now, combined move-in fees cannot exceed the equivalent of the first month’s rent. The ordinance also forces landlords to accept additional payments in installments, allowing tenants to pay gradually over a period of six months if they cannot afford the fees when they first sign the lease. Landlords are now also limited in how much they can charge for pet deposits: No more than 25% of one month’s rent (and payable over a 3-month payment plan).

RD House is fully prepared to work with these new requirements and are able to collect Last months rent and pet deposits in installments.  There is an administrative cost to billing, tracking and collecting installment payments, and we will have to charge a $9.95 per month fee to owners when tenants request this option (but only during the period of installments).  We generally would pass tenant-related costs like this to tenants, however the council legislation specifically prohibits doing so.

Seattle Landlords Push Back
Seattle landlords disagree, arguing that the new ordinance is an overreach of local authority.  RD House agrees with this pushback and lobbied against these new provisions with our local councilmembers and with the Mayor. 

“I am offended by the city [telling] me that I cannot protect my own investment,” said Chuck Cady, a local landlord.  Lizbeth Lyles, another landlord, echoed that sentiment. “I’m feeling a little under attack by the city council. Putting all these restrictions on the landlords is not the solution. It’s just going to make us sell the properties.” This could lead to units being purchased, renovated, and re-listed for rent at even higher prices.

Other landlords warned City Councilors to prepare for the unanticipated consequences of the new ordinances. Landlords will simply shift to risk mitigation by increasing rents or increasing the tenant screening criteria to favor more financially stable residents.  RD House will advise our owners on a case by case basis if the restrictions pose risks that require consideration.

Tenant Protections in Other Markets
Seattle isn’t the first city to adopt new legal protections for tenants in the wake of growing concerns over housing affordability.

Just last year, we highlighted an ordinance passed by the San Francisco City Council that made it harder for landlords to initiate no-fault evictions against educators employed by local schools and childcare centers. In September, a San Francisco Superior Court judge ruled that the ordinance was in conflict with state law, and the city had to revoke the policy.

Other cities have implemented new inclusionary zoning policies that require developers to reserve 20% of all new units for affordable housing.

Whether these policies will actually make a dent in the affordable housing crisis remains to be seen. If so, we suspect that other cities will follow suit by implementing new landlord-tenant policies of their own. It is important for landlords and property managers to monitor these proposals closely, weighing in at local hearings as appropriate.

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