This article was posted on Sunday, Sep 01, 2019

It appears that the state of California believes that the housing shortage should be placed on the shoulders of housing providers and the politicians continue to burden them with new laws in an attempt to solve the problem.  They chisel away at private property rights and place more and more restrictive laws on the people who are actually providing the housing in the first place. Don’t they know that these laws only cause rents to go higher and create less housing?  I don’t get it; this makes no sense to me.  

Being a rental property owner in California has become quite taxing.  With all of the state and city laws, who in their right mind would consider stepping into the role of a housing provider?  There are building regulations, registration fees, inspection fees, inspection citations with fines, screening protections for criminals, determination of tenant base by requiring owners to accept Section 8 applicants, “just cause” evictions, rent increase limitations, and the retrofitting requirements. All of this on top of the headaches of every day management costs and tenant problems. 

Will They Ever “Get it”?

Perhaps we should give one building (in a rent controlled jurisdiction) to each of the City Council members and make them individually responsible for their management.  I give them six months and maybe then they would eventually “get it” and most likely sell the building or change their own laws! I think it’s the only way they could understand how some of the decisions they make are detrimental to rental property owners. 

Maybe … just maybe … they would get what it’s like being a landlord when:

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They call a vendor and discover the rising costs of repair and maintenance. Would they then put price controls on what plumbers and electricians charge?

  • One of their tenants doesn’t pay rent and they learn how costly (time-wise and financially) evictions are. They might even reverse their vote to extend the time in which a non-paying tenant can respond to lawsuits.  
  • They go up in court against BASTA, with their non-paying clients presenting false accusations to purposely extend the eviction into a more lengthy process to demand attorney’s fees.   
  • They have a disgruntled tenant in L.A. who maliciously calls HUD on them and they get bills for $201.50 (for the inspection AND the re-inspection), along with the cost of repairing the damage – that the tenant purposely caused in the first place.
  • They get their excessive water bill – caused by that same non-paying tenant who leaves the water running continuously.
  • Or … already struggling to keep up with excessive costs to perform even bare maintenance, when REAP takes their building and instructs their tenants to pay only one half of their monthly rent into the city’s escrow account.
  • They see their trash bill has increased 500%; the excessive cost preventing funds from being used as building maintenance thereby causing additional citations from the housing department  inspectors – which by the way, they will be paying the fees for.  
  • They get that call at 3:10 am that their tenant is locked out of their apartment and needs a key or when there is a major plumbing emergency only to find out that the tenant changed the locks and the unit is inaccessible.   
  • Their “poor”, rent-controlled tenant who drives a Lexus comes back from a lengthy vacation with hitchhiking bedbugs and demands the landlord takes care of it.  (Naturally, the tenants didn’t report it until six months later when the serious infestation has spread to adjoining units and the cost of extermination triples.)  
  • Oh wait – how about relocation fees?  When THEIR son returns home from college and needs a place to live, let THEM pay their tenant the astronomical moving fees required because you see, it’s not their right to do with their building what they want.
  • They walk into a newly vacated apartment to find the walls painted black, the lighting fixtures removed, appliances gone, crayon markings in the kid’s room, torn or stained carpet and the smell of cat urine throughout.
  • They realize that a 1% to 5% rent increase does not even bring them close to current market values. 
  • That sweet woman they rented to brings in six other family members who all have drinking problems and “emotional support animals”.
  • Their disgruntled resident manager claims to have worked many more hours than reported and is now suing them for $100,000.00.

Yup, I say – give them one building each to manage for a year and they will second-guess the “luxury” of being a landlord.  They may even use their power to reverse their own laws.

I can only imagine that they must think that all apartment owners are rich and just sit back with a glass of wine greedily collecting as much rent as possible … doing as little as possible.  Perhaps they have the wine-drinking part right, but most likely, it is consumed to deal with all the headaches that naturally come with ownership – not to mention more and more restrictive laws that are voted in.

Landlords Fight Back!

SAN JOSE: Landlords have already filed a lawsuit in the city of San Jose against the “Rent Registry” which requires owners of units to provide confidential rental information to the city’s database.  A second lawsuit was filed against the city to reinstate the landlord’s ability to pass-through utilities to tenants and a third lawsuit was filed BY THE TENANTS themselves who do not want their personal information given to the city.  

LONG BEACH: Effective August 1, a new ordinance in Long Beach will require landlords with four or more units to pay tenants between $2,700 to $4,500 if they choose to move rather than pay a rent increase of 10% or more. To qualify for relocation assistance, tenants must have lived in the unit for at least one year and not engaged in any actions worthy of eviction. But soon, a lawsuit will be filed against the City of Long Beach from property owner rights group Better Housing for Long Beach (BHLB), according to the organization’s attorney, Paul Beard, a partner at Alston & Bird.

200 New Bills!

In the first half of 2019, members of the California Legislature introduced roughly 200 bills that addressed the state’s worsening housing crisis. Most of these negatively affect rental property owners insinuating that apartment owners have been targeted as a means to solve the problem.  It doesn’t take a rocket scientist to know that other states without these controls are looking much more attractive to investors.

Rent Control Does Not Solve Housing Problems!

In Oregon: Brought about with the invasive rent control measures adopted in Portland, the city is already experiencing a loss of rental housing stock.  It was reported that landlords are not just threatening to sell their rental properties because of their policies – they already have.  And builders aren’t going to build.  According to a report from the Rental Housing Journalhere’s what one builder said: ‘We have delayed starting three projects, one for 39 micro units, all inclusionary, and another one for 48 low-income situations and a third one potentially bigger than the first two. We have asked for no subsidies, but Portland’s deciders are making it too difficult for developers, owners, and managers. The word in investor meetings is that other cities are more attractive for investing.  But… the state still believes that rent control will solve their housing problem.  Wrong!

In New York:  Landlords are revolting.  It’s been reported that a lawsuit has been filed in Federal Court by the NY apartment association and the Community Housing Improvement Program against the city (possibly naming Governor Andrew Cuomo), arguing that Cuomo’s new rent law violates property owners’ constitutional right by “unlawful taking of property”.  Developers and landlords are saying it will discourage development of new apartments and make it impossible for landlords to pay for maintenance and improvements. They also say the rules will make existing, market-rate units even pricier because no one will ever leave permanent stabilized rentals.  

Very simply put, using NY and Oregon as examples as to what is happening in housing markets due to rent control restrictions, why would California follow suit?  One just has to read the news to discover that RENT CONTROL DOES NOT SOLVE THE HOUSING CRISIS ANYWHERE. I haven’t read one article from an economist that disagrees.  

City Council members and lawmakers are supposed to be smart.   They are our leaders. I just don’t get how they don’t get it! Send a copy of this to all politicians!! 

Patricia Harris is Senior Editor of the Apartment Owners Association of California, Inc.