Op-Ed on Seattle City Council Regulations

Larry Crites | Real Estate Broker + Rental Property Owner

The litany of new regulations and the hostile tone towards landlords from the Seattle City Council is having the exact opposite effect on housing than the Council intends. New laws and regulations passed by the City Council in the last couple years may have well-intentioned purposes, but in practice are working against the interest of housing access and affordability.

An example of the unintended results of just some of the recent Seattle ordinances: Rental Inspection Ordinance A fear of what may be required is pushing some long-time owners to sell homes and buildings that may be up to code, but are cosmetically in need of updating. These are often rentals that are also well below market rent. A new apartment owner will almost certainly remodel and raise rents. And nearly all single family sales are being made to owner occupants rather than new landlords, resulting in a loss of rental inventory.

Besides being a waste of time and money, this ordinance hasn’t been a big deal for most owners, but fear of what might happen is driving some longtime owners out of the business.

60 Day Notice Requirement to the City for Lower Rent Buildings Prior to Sale

I’ve heard this ordinance referred to, tongue-in-cheek, as Seattle’s new “minimum rents.” Obviously, this gives landlords an incentive to raise rents above the threshold for penalty. The notices the City sent indicating what were considered “affordable” rents was also a wake up call for some long-time landlords who have allowed rents to slip well below market.

Airbnb Ban

Not only does the City lose a way for people to work a second job to make ends meet, but we lose an important temporary housing option while people look for scarce housing. The vast majority of Airbnb units are higher-end properties, so if not rented short-term, they will either be permanently leased as high-end rentals or sold as they are taken out of Airbnb use, neither of which will help affordability.

Seattle’s 8–1 Vote on a Resolution in Favor of Rent Control

The huge consequence here is fear. Small landlords that have been renting units under market, often for years, now have a giant incentive to either raise rents or sell. For small landlords, a rental property often represents their nest egg and their ability to retire someday. Just the threat of rent control has already caused many people I know to sell rentals, reducing inventory as rentals are bought by owner occupants or developers. We are going to look around in the near future and wonder where all the single family homes or duplexes with family sized units went. And once these units are out of the rental stock, they aren’t coming back with today’s sales prices.

The New First Applicant Rule

Requiring landlords to take the first qualified applicant encourages raising rents so you don’t get multiple applicants, and to raise standards so there is less risk of having to rent to a problem tenant. Can you imagine showing up to a rental open house and having to referee who was first? It’s a little ironic that keeping your rent low now has the potential to get you sued. This law clearly demonstrates the disconnect that the City Council has in understanding how small landlords operate vs. large buildings with on-site managers.

The City Council is Currently Pushing a New Law that Would Require Landlords to Allow Tenants to Move in with 1/6 of a Month’s Rent as Deposit

So the renter of a $1,800 apartment can move in with $300. What happens if they move out with no notice a month later? What if they leave a mess? That 1/6 of a month’s rent isn’t going to come close to covering the lost month’s rent while the unit is re-rented, and just cleaning can easily run $300 or more. The only answer for a property owner is to seek a judgment against the tenant, which hinders them from renting in the future. Vacancy, unrecoverable costs, and wasted management time drive up rents for all tenants. Again, this will be a much bigger burden on small landlords. If the City Council was serious about affordable housing in Seattle, they would be working with the existing small landlords in the City rather than vilifying them. Like small business people who provide the largest share of new jobs, we provide the largest share of affordable housing. As a small landlord, I know my tenants by name. I know their situations and work with them when they have issues. But the deluge of new regulations and costs is pushing people like me out of the business, or forcing us to change our business practices in ways that work against affordability and access.

Thinking outside the box in land use and zoning is a potential zero or low cost way to draw small landlords into rental ownership and increase the supply of affordable housing. For example, rather than just rezoning more single family neighborhoods for expensive townhouses, try “existing structure” multi-family zoning which would allow existing homes to be converted to multi-family, preserving the character of neighborhoods, and replacing some of the older duplex/triplex/fourplex housing that has been torn down in our City’s building boom. Or have pre-approved designs for DADU’s so that each owner doesn’t have to go through an expensive one-off design process. These are also the kind of properties that will be owned by small housing providers who will self-manage and know their tenants personally. And that’s the real answer in the long-term.

Larry Crites has been a real estate broker in Seattle since 1986 and a rental property owner since 1987. He specializes in in-city single family homes and smaller residential investment properties.

For more information about RHAWA please visit: RHAWA.org