Does landlord registration help?

February 15, 2011 2:25 PM

Landlord registration. Is it working for your community? Why or why not? What steps has your community taken to address rental housing that's in poor condition?

Our town is in the midst of forming a housing commission to help address the poor quality of some of the housing stock. One of the most commonly identified problems is that of the absentee landlord that fails to maintain their property.

AskMe is rife with tenant-landlord relations type questions on a wide range of topics, but there's little about the process of regulation of rental properties. Most landlord registration programs I've read about are designed to make sure that a city entity (i.e. police or code enforcement) has the means to contact the property owner to resolve issues that may arise such as drug dealing at the property, poor upkeep, substandard plumbing/electrical, or the like.

Obviously, some problems are caused by tenants themselves, but others are caused by landlords trying to wring maximum income from a piece of property. We're looking for ways to address the slumlords out there without an undue burden on poor old Mrs. Jones who rents out the garage apartment to a quiet student at the seminary.

Has your community established a landlord registration program? Does it include things like inspections of the property to make sure it meets minimum housing standards (i.e. heat, water)? Are the landlords considered businesses and required to get a business license? Does it have a provision that exempts Mrs. Jones as an owner-occupier? What works and what doesn't? What tips, tricks, pros/cons, and suggestions do you have for a community looking to establish such a program?

Thanks for your help.

posted by pappy to law & government (15 answers total)

Check out the Certified Shaker program in Shaker Heights, OH.
posted by chesty_a_arthur at 2:34 PM on February 15, 2011

Given the current state of the economy and real estate markets, I would guess that many landlords are trying to minimize their losses and cope with cash flow problems rather than "wringing maximum income" out of anything. Generally speaking, this seems like a bad time for 'get tough' policies. Consider what happens if you try to require repairs for which there isn't any money available. Be careful not to set the bar impossibly high.

Notice that the Shaker Heights program offers positive incentives, not penalties.
posted by jon1270 at 2:43 PM on February 15, 2011 [1 favorite]

a town i used to live in, addison, had a law requiring rental apartments of more then 2 units to get a license, renewed annually. if they passed the inspection with no problems, the license was free--the more problems, the higher the cost of the license, and more inspections. things like no screens on windows, no curtains, torn carpet, burnt out bulbs, etc, all would cost a landlord.

note: link takes you to their ordinance chapter on licensing.

as a tenant, i found it sucked: i had to open my apartment to city inspection once per year, and found out that things like extension cords and furniture arrangement could get my landlord fined.
posted by lester at 2:48 PM on February 15, 2011

Where I live, tenancy is governed by the Residential Tenancies Act which is very very specific about standards for housing, and the rights/responsibilites of landlords and tenants. Disputes are able to be heard at a Consumer, Trader and Tenancy Tribunal, basically a court without lawyers, which can very quickly make enforceable orders in disputes. It's worth noting that the CTTT is the only body which can issue eviction orders---a landlord has to go through the mediation process before they can evict a tenant. Generally the process from application to mediation to orders takes less than a month.

All residential tenancy contracts have to be registered with the Department of Fair Trading, which also holds the tenant's bond (ie. so the landlord can't just arbitrarily keep it). It's a pretty good system, in that all landlord and tenant contracts have to be registered centrally, and both parties can be called to account to each other without huge legal costs.

poor old Mrs. Jones who rents out the garage apartment to a quiet student at the seminary

Cry me a river. In my experience it's the smaller landlords who are the very, very worst. I once helped move a friend of my parents' from a boarding house where he was living in two rooms without hot water, with one hotplate and no lock on his door—please note that this was in the inner west of Sydney in social-democratic welfare heaven Australia. His landlord was his neighbour, who lived in conditions not much better herself.

Smaller landlords are more often undercapitalised, more subject to outside financial pressure, and much more dependent themselves on the small income they get from rent. They're often far less able to make the basic repairs and maintenance on properties, and less likely to mitigate against risk, than larger, constituted property management companies. Frankly, if you can't live up to the responsibilities of keeping your rental property up to a basic standard for human habitation you don't deserve to be a landlord.
posted by Fiasco da Gama at 2:54 PM on February 15, 2011 [2 favorites]

Here's the property registration page for Baltimore. Generally I think it's a good thing. There's an inspection to get a certificate of occupancy, which includes lead paint certs, etc, then the landlord can renew every year without reinspection.
posted by electroboy at 3:27 PM on February 15, 2011

Oops, hit submit too soon. I meant to add that I agree with Fiasco da Gama. People who are renting out a single property aren't professionals and make all sorts of rationalizations about why they don't need a legit lead certification or properly grounded wires, especially if they used to live in the house.

I think it's probably a good idea to have a periodic inspection, but every year seems like a lot. I also think it's a good idea to make sure tenants are aware of their rights, and to whom to report problems like insect infestations and sewer backups when their landlord isn't reponsive.
posted by electroboy at 3:33 PM on February 15, 2011 [1 favorite]

New Haven, CT has such a system through their Livable City Initiative. I'm a renter here, and it seems to work well in my experience.

Landlords need to be registered through a license program (it's not a business license, it's narrowly focused on just landlord responsibilities) and inspections every 2 years are performed to keep this license up to date. 2 and 3 unit owner-occupied dwellings are exempt from the licensing program so Mrs. Jones in your example doesn't need to do anything special.

I think the LCI has done good things in New Haven (see some related news stories with some specifics here, here, and here for example) but like I said, I'm a renter so feel free to consider my views biased.
posted by reptile at 4:05 PM on February 15, 2011

Meanwhile, in Texas, you can get decent housing for affordable price and no hassle. To a pro-government enthusiast, every problem is an opportunity for more regulation, where as the market, if let free, can solve it just fine.

The reason why your rental housing is dilapidated is because YOU put up with it. You put up with it because you are paying rent below what the landlord wanted to rent out to, its market price; which should include the interest for his investment, the cost for maintenance and operation, and perhaps a reasonable profit for running a rental business. However, the landlord are not allowed to raise his rent to this natural market rate because of government regulation, aka rent control. Thus deprived of cash flow, he let his investment degrade simply because he doesn't have a choice. Meanwhile, because of the lower-than-market rent, the government simultaneously increase the demand for rental property (since now more people want to rent at below market price) while decreasing the supply of rental property (property owner will rather not rent, and investor/developer will rather not build rental houses). People who currently rent will put up with rundown housing because they know they are getting a good deal in low rent, and the moment they pick up and leave, hundred others will be happy to take their place. Landlords doesn't need to fix up their property because there is no competition: no one else want to be landlord with such low (sometime negative) return; and they also know, despite all the complains, the tenant will not move. Thus is your situation.

Why don't you lobby for the reverse of government regulation? Yes, get rid of rent control, government intrusion, etc... Yes, this will mean the rent will increase; but that will also do 2 things: 1. make other renters consider alternatives to renting in the same place as you are; perhaps some of them can commute. Or maybe they can find a different job in the suburb. You, however, will have less competition and have more choices in housing. 2. The landlord will have more profit, but also have more competition; he can not keep his property dilapidated if he know his tenant has choice of better places offered by other landlords. Many more landlord will appear, and investor will find money to invest in building more rental property... etc, etc... The market will balance supply and demand. It's not a very radical concept; and it's eminently sensible.
posted by curiousZ at 4:35 PM on February 15, 2011 [1 favorite]

I find it a little unfair to single out landlords. Why not look at all real property owners. In many places, if you own your own home, or own your place of business, you are allowed to ignore the building codes.

Consider this comment from above:
Small landlords 'make all sorts of rationalizations about why they don't need a legit lead certification or properly grounded wires, especially if they used to live in the house.'

This comment implies the double standard. A home-owner is allowed to live in a dangerous dwelling, but every landlord needs to be monitored.

Why not just enforce building codes? Your community is not happy with the housing stock. I guarantee your community has a building department and a code enforcement division already in place. Your solution to improving the housing stock is to create a new government agency to regulate only one type of real property owner.

You already have an agency in place to monitor and maintain the building stock in your town. Use code enforcement, against every real property owner equally.

Are your code enforcement agents patrolling the town? Are they checking out different construction projects that they see?

Does your town have a Lowes or Home Depot? How thousands of dollars were spent at Lowes last month buying electrical wire last month? And how many electrical permits were pulled in your town last month?

As a licensed contractor, I say enforce the building codes. Get code enforcement out there. I have landlords, home-owners, and business owners as customers - and often if you suggest doing the work correctly, you lose the job. Home-owners and business owners know that code enforcement is never going to check up on them. They just hire an unlicensed yokel to do it improperly for cheap. Most landlords are exactly the same. Some landlords have gotten bit by a housing board, and they follow code.

Everyone should follow code. And then the housing stock would be healthy.
posted by Flood at 4:49 PM on February 15, 2011

curiousZ, where I live the price of rent is set entirely by the free market—in fact, there are tax deductions and incentives to promote residential real estate property investment. We were one of the only countries to have legal negative gearing. It's the conditions of tenancy that have to be subject to the rule of law---one of the basic conditions of a free market.

The market doesn't determine the condition of rental stock or the level of competition (which has more to do with ageing suburbs and urban demographics), the market just provides an ongoing real estate boom with attendant accelerating price rises. I've inspected houses in Sydney with hard-packed dirt floors, and watched yuppies like me try to outbid each other to live there.

People who currently rent will put up with rundown housing because they know they are getting a good deal in low rent

People put up with rundown housing because the alternative is the streets.
posted by Fiasco da Gama at 4:50 PM on February 15, 2011 [2 favorites]

It can be very tough to enforce these kinds of schemes, especially if you have a very large pool of rental housing. It takes a lot of manpower to proactively go after housing code violations of all types, and it's a very tempting line item to cut when tax proceeds go down.

That's been my experience with registration programs; lots of people are in violation for the exact same reason that no one gets cited for letting their sidewalks fall apart. What you need is renters who are willing to fight for their rights (i.e., call inspectors, apply to have their rent put in escrow, etc.,) which is something registration programs don't tend to create.
posted by SMPA at 5:10 PM on February 15, 2011

"Frankly, if you can't live up to the responsibilities of keeping your rental property up to a basic standard for human habitation you don't deserve to be a landlord."

This.

You might contact the City of West Hollywood in California. They do a pretty good job of over-seeing the rental stock, although I believe the City of LA does the bulk of the inspecting and such.

I can't tell you how important it is to make sure that each rental unit in your city is habitable by legal standards.
posted by jbenben at 6:35 PM on February 15, 2011 [1 favorite]

@Fiasco: Here in California, the real estate bubble also create the negative gearing situation; except they are funded by the irrational exuberance of mortgage banks instead of by law. Eventually, however, the tax-payers ended up bailing out the banks and the federal insurers; plus the investors lose a lot of money. These are the two main loser of the last bubble.

I'm curious why you said the market doesn't determine the condition of rental stock. What I observed in CA real estate bubble is an improvement of the housing stock. Loads of new houses and condos were built (on new land as well as on reclaimed land via demolition); and construction supply companies (Home Depot/Lowes) have record profits selling building materials. On hindsight, perhaps building houses 100+ miles away from metropolitan area with questionable employment prospects was unwise; and taking out that equity loan to upgrade your kitchen countertop was a loss-making activity; but undoubtedly, the quality of housing improved from those investment. During the boom years, many renters moved out and bought their own home, a material improvement from their previous housing consumption. Rent was depressed for a long time (compare to expansion of the general economy). Today, the trend is reversed; many previous owners are now renter, and rent doesn't drop (despite the general depression of the economy; a net gain in comparison). However, regardless of whether a person is a home-owner or a renter now, all benefit from better housing due to the improvement of those houses during the boom year. Of course, abandoned foreclosed house benefits no-one, and I do hope that situation will be resolved eventually.

Housing quality is a direct function of investment into the sector. I do agree with you that private housing enjoyed a much larger share of that investment than shared housing, due to government incentive. But, as few of us can consume multiple houses (and none of us can do so concurrently), improvement in private houses benefit those who rent as much as those who own.

Finally, regarding rent and homelessness, people typically adjust their housing consumption by varying living density, not by choosing homelessness. During the boom year, it's one yuppy per McMansion; in the lean time, people share houses, rooms or move back in with their family. While this certainly degrade the quality of the housing product they get; this is not the same as housing stock quality.
posted by curiousZ at 7:35 PM on February 15, 2011

Thanks for all of the responses, they're all helpful. Really like the examples of other towns and various perspectives on how effective those programs may be. Whatever we come up with we'd want it to work for landlords, tenants, and neighbors.

Others I'm working with are looking at code updates that would apply across the board to all property owners. Even the code enforcement guys want to see the code updated so they can better address problems. I asked specifically about landlords as one class of property owners because their properties are consistently identified as among the worst offenders across all neighborhoods. Our code enforcement doesn't really patol town, but they do respond to complaints. Unfortunately, code enforcement is a city department and building permits & inspections are a county run agency; they talk some with each other, but the division of labor does pose some challenges. New buildings get numerous inspections, but the biggest part of the housing stock is from the late 1800's to the 1940's and those aren't inspected unless they've pulled a permit for work or a new owner paid for an inspection during a sale. Based on my experience with contractors around the area, I wouldn't be surprised if many don't pull permits for what they view as small jobs.

curiousZ, we're not a rent-control town. There is some government subsidized housing in the area, but that actually will get an occasional inspection as a result. The reality of the situation here is that we see landlords buy cheap, perform little or no maintenance, and rent to anyone that comes along. We do have concerns about too much government involvement, thus the Mrs Jones bit as we've found that owner occupied properties tend not to be the problem.
posted by pappy at 8:13 PM on February 15, 2011

Guh? Rent control? Who, besides New York has rent control anymore? I could see making that argument about Section 8 housing, but most landlords do that because it's a guaranteed check, not because they want to be in the low end landlording game.
posted by electroboy at 6:20 AM on February 16, 2011