The Problem With City of Portland Housing Solutions

A little over a week ago I attended a property managers’ association meeting where two members who had attended a City of Portland council meeting regarding rental housing regulations gave a brief summary of the meeting.  The focus for the past couple of years has been the lack of affordable housing and the rising cost of rental housing.  In response to this the City of Portland had instituted “temporary” regulations regarding the issuing of no cause evictions and rent increases greater than 10% as well as extending the period of notices to vacate and rent increases to 90 days .  It also mandated landlords pay relocation expenses for the tenants that had to move out due to rent increases or no cause evictions.  They stated these regulations applied to landlords who owned more than one rental property.  At this meeting it was decided to include all owners of rental property and to make these regulations permanent. 

Perhaps what is more disturbing is that one of the association members at the meeting said they heard one of the council members mutter under their breath something about pushing to make these regulations apply statewide at the next meeting of the state legislature.  I know this is antidotal, but it is a very real possibility because similar legislation was avoided in the last session of the legislature by one vote.

I applaud the City of Portland’s desire to do something to alleviate the high cost of rents and the lack of affordable housing.  It has been somewhat amazing to see the price of rents and housing increase over the last several years.  Nevertheless, the quick fixes they have proposed and are implementing will, in the end, do more to hurt than help both tenants and landlords. 

Some of the ways this will impact tenants:

1.      Guarantee annual rent increases of 9.9% (Many landlords, if they have good tenants, do not annually increase the rent because they want to keep the tenants.)

2.      Limit the availability of affordable housing by:

a.      Increasing the time and administrative costs of government mandated owner compliance.

b.      Disincentivizing investor purchases of housing thus decreasing the supply of available rental housing. (Last week I talked to one investor who said they weren’t even considering buying investment property in the City of Portland for this very reason.)

3.      Reduce the quality of rental housing.  Owners will be less inclined to improve housing beyond necessary repairs to conserve capital for potential relocation expenses as well as being limited in their ability to recover house improvement expenses from current tenants.

Some of the ways this will impact landlords:

1.      Increases costs of having and managing investment rental property.  Many owners have mortgage and insurance costs that are barely covered by the monthly rent.

2.      May lead some owners who would manage their own property to take on the additional cost of hiring a property management company because of the increased regulatory environment.

3.      May lead some owners to sell their investment property and buy property in less regulated regions or states.  This would decrease the available pool of rental properties.

Rent control, of which this is the beginning, will result in less and lower quality housing and higher rents as seen in San Francisco and Seattle:  The only people who benefit from this band aid approach to the housing problem are our elected representatives.  Their current solutions have the appearance of helping but end up hurting the very people they purport to help. Instead of addressing the real underlying problems of lack of education, mental health, strengthening the family social structure and creating the merit-based infrastructure of well-paying jobs accessible to all people, lower costs and barriers to low income housing producers , they take the easy way out.  It has taken a while for us to get to this point and it will take a while and coordinated effort to get us headed out of it.  The current COP solutions don’t help the housing problem--they just add to it.