Thursday, March 16, 2017

The Red Tape Times (article 29)

Seattle Robs Landlords of Their Right To Choose Tenants

Source: Pacific Legal Foundation

Back on August 9th, 2016, the Seattle city council passed the first in time rule, which mandates that landlords of any capacity must rent to the first qualified candidate who applies for a unit. The statute went into effect on January 1st. Since landlords are no longer allowed to assess the risks involved for candidates who meet broad criteria like not having pets and being able to pay, this has raised rents and made it harder for candidates to meet the criteria for tenancy. Small scale landlords who rent out units on their own residence have been saddled with the greatest burden since they are more dependent on rental income from one tenant than corporate landlords who rent out hundreds of units. One sketchy tenant could make them lose a month's worth of rental income and put them in the hole. Their personal safety would also be put at greater risk, especially for female landlords, since they are no longer able to assess the character of prospective tenants. A few small scale landlords have spoken out against the new mandate. Their grievances run the gamut of issues from personal safety to the financial risks of renting to delinquent tenants. The Pacific Legal Foundation has filed suit against the city of Seattle on behalf of Marilyn Yim, a small scale landlord who lives in one of her own triplex units with her family.

We are, literally, mom-and-pop property owners renting our home to make Seattle affordable for our family and our tenants, and the council’s actions hurt not only us but the very people they keep saying they want to help,” said Mrs. Yim. “We aren’t corporate landlords sitting on large capital reserves or with hundreds of rentals to spread our risk. One bad tenant could take us years to recover from financially. The primary way we have to manage our risk is by carefully selecting tenants and collecting adequate deposits up front. The new city rule deprives us of that flexibility. With this added, undue risk, we can no longer afford to charge below-market rents or give a break to good people who are just starting out or rebuilding from their own setbacks.

No business would be told they have to hire the first person to show up with a decent resume,” said Ms. Lyles. “This law would be ridiculous if it wasn’t so frightening!I inherited a small amount of money — and used the food bank for several years — in order to purchase my rental,” she recounts. “Now, as a female landlord, I’m very concerned about the ‘first in time’ mandate. Women are taught from childhood to ‘trust our gut’; I’m now denied that option. I am terrified of no longer having a choice over whom I entrust with the majority of my yearly income (and life savings), not to mention my personal safety. There are preexisting laws on the books protecting tenants from discrimination; this new one comes at too high a price: robbing landlords of protection from potentially dangerous situations.

The city’s first in time mandate puts an undue burden on small landlords who manage their property after-hours and on weekends, and do not have the capital to hire a management company or absorb the cost of an expensive eviction,” said Scott Davis. “We will be forced to make strict screening requirements to protect our investment, exposure and liability, since we are no longer able to use our best judgment and reasonable discretion in selecting a tenant. The result will be to exclude good tenants who are able to make a good impression.This legislation only rewards the fastest applicant and does nothing to protect the people it seeks to help,” he continued. “As a result of this new rule, we have substantially raised our rents across the board with the anticipation of being forced to hire a property management company and avoid the future sting operations of the city and the convoluted rules that are being implemented.

The intention of the first in time rule was to eliminate unconscious bias against protected classes in the rental market, even though there are already anti-discrimination laws on the book. The statute, though perhaps well meaning, had the opposite effect of what was intended. One of its unintended effects is that it put lower income earners at a greater disadvantage than before the statute was enacted. Another unintended effect is that it favors native english speakers over immigrants, who are more likely to be disadvantaged by a language barrier in the application process. The road to hell is paved with good intentions. It is not the intentions of policies, but their effects in the long run that make them good or bad, and all of the long run effects of such sweeping policies as this statute cannot be accurately predicted. For this reason, governments of any level should stick to simple and straightforward measures that do not unnecessarily burden their citizens. Shifting taxes onto the unearned increment from land would make rental housing more affordable, and thus more readily available, than forcing landlords to take tenants on a first come first serve basis. The latter merely covers up the symptoms while the former strikes at the root of the problem.

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