As I have blogged in the past, Washington has some amazingly tenant-protective rental laws. We may not be the most anti-landlord jurisdiction in the nation -- we've got a lot of competition from San Francisco, New York, Cambridge and so forth -- but we're certainly Olympic-caliber contenders.
Anyone who is well versed in the basics of economics probably suspects the result: Property owners in Washington do not want to be landlords. I know more than one homeowner who has considered turning their basement into a rental apartment, then considered the possibility of having a nonpaying tenant who can't be evicted for months and thought better of their plan.
But what you may not have considered is that these sorts of rules have a disparate impact: They disproportionately affect the poor. For one thing, of course, they drive the price of housing up, because of all those units that might be created but aren't. That's not the only problem, however. When they can't evict their tenants, landlords start to get very choosy about who they'll accept in the first place.
Case in point: As housing prices have soared in the District of Columbia, the city has been struggling to find new homes for the people who are displaced. The government is leaning hard on an initiative called "rapid rehousing," which places people into private-sector apartments and pays their rent for a set period of time while they get back on their feet -- a temporary Section 8, if you will. It sounds fine in theory, but as the Washington City Paper reports, folks are having a very difficult time finding landlords who will take the checks.
In the comments to that post, a number of people who say they are landlords explain why they are not eager to sign up for this program -- people with unstable, low-wage jobs are likely to have a tough time making the rent consistently. And if you can't evict them, that rapidly becomes a nightmare:
Once upon a time, DC landlords would covet Section 8 renters. The renters themselves wouldn't usually pay their share but the District check always came on the first of the month. And lets be honest, landlords really didn't have much else in way of a customer base in DC in the 70s, 80, and early to mid 90's.
Thats all changed. The rental market is on fire, and why would I (as a landlord with 4 seperate units) want to encumber myself with a below market rate tenant that I couldn't ever evict if I wanted to? I had a 2 bedroom unit become vacant 3 weeks ago in Shaw and had 18 people show up for the 1 hour open house, and 5 people (20-30 somethings) submit applications for it, all of them with incredibly strong credit and job bonafides.
DC's hyper heavy handed tenant friendly laws are another reason I would never rent to someone who couldn't provide serious proof of income and credit. I've had to evict 2 tenants over the past 24 years. Both with marginal credit and weak jobs (retail and food service) but they came across as nice and figured I'd try to pay it forward a bit.
The one stopped paying rent immediately and flouted her knowledge of the Tenant Advocates Office. By the time the paperwork was in, it was the dead of winter and I wasn't allowed to throw her out, or turn off her utilities. I had to eat 9 months of rent and utilities, on top of more than $2K in damages and another $1,500 in legal fees. The second person was a little faster, but it was like the judges I had to deal with were in on some joke as they kept extending the tenants deadlines, and demanding more "proof" from me, and nothing from the tenant.
Never again will I rent to anyone but a A+ tenant, unless DC changes their laws to make it less onerous to throw out the deadbeats.
There are several other similar testimonies. These sorts of landlords are better off than their tenants, of course, but they're not exactly like Daddy Warbucks. They have to make the mortgage payment even if a tenant can't make the rent.
Larger landlords -- the kind who operate Washington's coveted rent-controlled apartments -- can better afford to take the hit. But if you have a coveted commodity like a rent-controlled apartment, why would you rent it out to someone who might cause you trouble when better credit risks are lining up to apply?
Making it very difficult to evict tenants is good for people who already have apartments. And of course it is far from the only culprit behind the city's ever-steeper housing costs. But it exacerbates the shortage, and the problems it creates are probably the worst for the people the laws are most trying to help.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
To contact the author on this story:
Megan McArdle at email@example.com
To contact the editor on this story:
Brooke Sample at firstname.lastname@example.org