Interesting Anti-Landlord Ordinance Approved in Seattle
Rental Property Investor · SF Bay Area, CA · Member since 2015 · 206 posts · 156 votes
Curious what others think of this new pro-renter ordinance approved in Seattle. Would this make you think twice before investing in Seattle RE?
In a nutshell, this ordinance aims to ban "discrimination by landlords against renters with alternative sources of income, such as Social Security benefits, veteran’s benefits, unemployment insurance, child-support payments and other assistance programs. The ordinance also will require landlords to review applications one at a time, then pick the first renter who meets their screening criteria."
Here's the link:
See the agents BiggerPockets members work with in Seattle, WA.
See agentsI don't have properties in that area. But, IMO, the only two issues I have with the ordinance are 1) not being able to select the best tenant and 2) unemployment as a form of income.
Unemployment as a form of income is RIDICULOUS. In most areas UE is 6 months, at the longest. And that is 6 months if they are applying for an apartment right at the beginning of their UE. What if there is only 1 month left anyway? Come on.
Do you know who also has to follow anti-discrimination laws? Companies, for hiring and promotions. Is there also a law in Seattle that companies need to hire the FIRST candidate with all of their requirements, instead of looking for the best qualified candidate? I'm guessing the answer is a giant no. So why would that same idea be different for LLs? It shouldn't. Also completely ridiculous.
When I attended a seminar by the Ohio Assistance Attorney General regarding the subject of discrimination, SSI or section 8 voucher recipients are considered a protected class when it comes to "Fair Housing". However, the financial affordability of 3x the amount of rent is not discriminatory.
@Account Closed - Just want to be clear that it was never my intention to "lure" people into viewing my post by using "click-bait" tactics.
Based on my review of the article, I did feel this new approved ordinance is more in favor of renters, and thus anti-landlord. That's my view and so to each his own. Agree to disagree. Etc. etc.
To everyone who has posted thus far, I've really enjoyed the varying viewpoints and have been put at ease given that I do own rentals in Seattle area. Thanks!
I'll try a real example so that maybe I can make my point.
An applicant applied for out NC apartment, a $695 rental. Their 'income' is SSI and they get a check for $733. They do not work, officially, but she does get unofficial assistance of about $200 /month. Via SSI, Eastern Carolina Payee Services, Inc pays the landlord directly. This is the automatic subsidy, similar to S-8 w/o the overhead.
I denied the applicant here in NC because they did not make 3X the rent. Honestly, when rent is 74% of your 'income', I don't know how anyone would feel comfortable renting to the applicant. I think it is immoral to put someone into such financial hardship.
Now let's look at a Seattle landlord. By law, the landlord must apply income screening criteria (such as an income to rent ratio) in a manner where the payment subsidy ($695 of $733) is reduced from monthly rent ($695). The rent is $0. The payment to the applicant per month is $38. So the applicant passes the income requirement by Seattle definition.
The government is forcing landlords into taking applicants where the applicant has virtually no possibility to succeed.
BTW, I routinely have county officials tell me that their placed applicants "easily" meet the payment qualifications for our efficiency apartments. $525 rent, $733 SSI payment. They use the same algorithm as Seattle. My algorithm is $525*3 = $1575.
I suppose one could raise the standards;
"3x rent in bank or other liquid assets, 100% positive references from all landlords from previous 10 years, 100% positive references from all adjacent current neighbors, 0 noise complaints filed against any occupants of current residence", etc
I'll try a real example so that maybe I can make my point.
An applicant applied for out NC apartment, a $695 rental. Their 'income' is SSI and they get a check for $733. They do not work, officially, but she does get unofficial assistance of about $200 /month. Via SSI, Eastern Carolina Payee Services, Inc pays the landlord directly. This is the automatic subsidy, similar to S-8 w/o the overhead.
I denied the applicant here in NC because they did not make 3X the rent. Honestly, when rent is 74% of your 'income', I don't know how anyone would feel comfortable renting to the applicant. I think it is immoral to put someone into such financial hardship.
Now let's look at a Seattle landlord. By law, the landlord must apply income screening criteria (such as an income to rent ratio) in a manner where the payment subsidy ($695 of $733) is reduced from monthly rent ($695). The rent is $0. The payment to the applicant per month is $38. So the applicant passes the income requirement by Seattle definition.
The government is forcing landlords into taking applicants where the applicant has virtually no possibility to succeed.
BTW, I routinely have county officials tell me that their placed applicants "easily" meet the payment qualifications for our efficiency apartments. $525 rent, $733 SSI payment. They use the same algorithm as Seattle. My algorithm is $525*3 = $1575.
No, the ordinance is talking about Section 8 vouchers regarding the 3X rule. It means the tenant only has to show they make 3X their portion of the rent. It doesn't apply to SSI recipients.
SSI is actually income that is very reliable.
The laws in the original post are laws that are in effect in CA - at least as far as not being able to discriminate based on source of income. And the other regarding processing applications in order, is just what's been suggested as the best way to avoid a fair housing claim anyway.
I do agree with @Greg S that there is virtually no enforcement of discrimination laws, unfortunately.
But, even in CA, source of income was never an issue for me, because tenants with "iffy" sources of income, never met my criteria anyway. And I wasn't "trying" to make them deniable. Credit is usually the issue.
There's a crazy council member in Seattle, though, who loves to see herself in the news. The one law she got passed that I think really is crazy, is the one we discussed in another thread, where tenants are encouraged to report their landlords for housing violations, and if they do so, they can withhold rent or avoid eviction or something crazy - I'm forgetting the details. But, yes, she's doing her best to get rent control in Seattle, and since she can't do that because of the state laws, she's working as much black magic as she can to try and create the same result as rent control. She's scary.
Correct. Most of this is covered by fair housing laws. Some forms of income do not have to be accepted. A good example would be "help" from a relative. Other forms are considered regular income under the law and must be used if an applicant provides that information.
How is selecting tenants different from hiring new employees for your business?
Because housing is more important than a job. Food, clothing, and shelter are basic human needs.
Is that how you run your business? Do you take the first tenant who comes through the door who meets your requirements? You don't even look at better qualified tenants who also applied?
Or are you telling people who are actually landlords, like me, how we should run our businesses without any actual knowledge of how the business works?
Here is my imaginary scenario. You have an open house at your rental in Seattle. You take 20+ applications for your rental property and you work through them.
The first application in the stack is a single mom with two kids. She doesn't have a job currently and is on her fourth month of unemployment. She also receives a child support check from her children's father, but it is often late and sometimes doesn't come at all. She meets all the income requirements based on these things.
The second applicant is also a single mom with two kids. She has held a steady job for the last 2 years and doesn't receive any child support. She also meets all income requirements.
Are you forced to go with the first applicant in the stack due to "discrimination"?
I choose not to own property in Seattle or King County. It is a whole different set of rules than the rest of the, otherwise reasonable, state. When you elect open socialist to the city council (and others not so open) you will get lots of anti-business laws ($15/hr, telling businesses when/how to schedule workers, etc). I foresee government moving into housing the same way as healthcare. We need to add thoughtful and well-reasoned arguments to the discussion - showing the unintended consequences of such well-intentioned laws.
Many sources of income are fine. But some of my biggest problem people come from subsidized sources. Transitional housing that only pays for 3-6 months is not adequate in most cases.
Our state has been working on a 'portability' procedure so an applicant can apply once and then use the same report with multiple landlords without paying fees every time they go to a new complex. While there are some issues to work out, this may help resolve some of the application fee problem. But any landlord who thinks they make money off of application fees is short sighted and petty. I simply run 1 application at a time and return any unused fees. My criteria is readily available to every applicant prior to applying, so they already know the standard.
Also @Anthony Gayden, let's not forget the "first-come, first-served" aspect of this new ordinance. So using your example, if that first single mother submitted her application first and met your criteria, then you must select her. Remember, these applicants can file complaints and so audits will happen. Guess, the selection criteria has to be more stringent in this case.
I employ a property manager to handle my rentals and they are law-abiding. They will not fudge documents for me in fear of lawsuits, etc.
I don't like it when the gov gets involved in my tenant choice selections. Frankly, if I don't want to rent to somebody who gets the bulk of their income from welfare, then I shouldn't be required to.
What I do find interesting is comparing it to a job applicant that meets the requirements.
There is only one industry that requires you to pay a fee to apply. Even if you meet the requirements may not get hired and they keep the fee.....
Any Government job.......
Also @Anthony Gayden, let's not forget the "first-come, first-served" aspect of this new ordinance. So using your example, if that first single mother submitted her application first and met your criteria, then you must select her. Remember, these applicants can file complaints and so audits will happen. Guess, the selection criteria has to be more stringent in this case.
I employ a property manager to handle my rentals and they are law-abiding. They will not fudge documents for me in fear of lawsuits, etc.
I'm not suggesting to violate the law, I'm just pointing out the ridiculousness of the law.
As a landlord, of course, I want the best tenants possible in my units. The ones who are clean, pay on time, and don't cause any trouble. I want the best odds of getting my money every month. My rentals are not a charity. My rentals are not something I do to help out the needy. My rentals are a business.
Government regulation is a part of all of our lives and a part of all business, even in the most landlord friendly states. Landlords are often vilified and portrayed as rich snobs who live in castles and treat "regular people" like garbage. Well the truth is that 90% of landlords are "regular people" who have day jobs, bills, and families that they must support. Most landlords are not wealthy. Most landlords have to get paid their monthly rent because they have a mortgage on the property that they are renting that must be paid every month.
Or are you telling people who are actually landlords, like me, how we should run our businesses without any actual knowledge of how the business works?
Yes, I am a landlord, and no, that is not how I run my business because I am not required to do so by law. I'm not taking a position on this particular law -- I'm simply pointing out that governments have a legitimate interest in ensuring their constituents are not deprived of basic necessities. Of course, the ways they go about this are often counter-productive.
I disagree. Being a landlord is akin to running a business. It's mentioned here many times that it should be approached in that manner from the very beginning in order to improve success. In operating like a business, why would a landlord be penalized for attempting to choose the best qualified applicant out of all applied applicants just as a business selects their employees?
I think the difference is if you have the applicant pay a non-refundable fee. If you get 10 applicants and each pays a $30 fee to apply. You fully run them all through the process and pick the one you want, then I think it is bad business. If everyone else gets their $30 back then meh.
Keeping the fees from those that fully qualify is akin to going to a movie theater paying to watch a movie and having them roll credits and walk you out, say "thank you" for coming and keeping the ticket price.
I think the difference is if you have the applicant pay a non-refundable fee. If you get 10 applicants and each pays a $30 fee to apply. You fully run them all through the process and pick the one you want, then I think it is bad business. If everyone else gets their $30 back then meh.
Keeping the fees from those that fully qualify is akin to going to a movie theater paying to watch a movie and having them roll credits and walk you out, say "thank you" for coming and keeping the ticket price.
So do you honestly think that landlords are out here making a profit on "non-refundable fees"? Do you think that is where we are making our money? Do you believe that landlords charging application fees is our big scam to "cheat" the poor inner city person struggling to rent a place?
If so, you honestly have NEVER worked in this business before.
Here, we aren't allowed refusing a tenant because they are on welfare. However, every applicant that I have come across who is on welfare didn't have a good enough credit score to qualify. I would imagine this would be a similar situation, if their income is from a less desirable source, their credit score would likely be too low to qualify.
If they have a great credit score, then they likely manage their money well enough that it doesn't matter too much where their money comes from. I wouldn't worry too much about this.
@Mike Cumbie I don't even feel that's what the laws big impact is on or pertaining to. I've never charged an application fee. My point is the law requiring the landlord to take the first qualified applicant rather than the best qualified of ALL applicant's. Why would any reasonable business person reduce his chance of success by not looking at all applicants and choosing the best qualified based on a fair set of standards.
I never said that is where you are making your money, actually it has nothing to do with the landlord themselves. I am not saying it is a scam, you made those words up and put them in this thread... all by yourself. You decided to throw "inner city" into it, my comment says no such thing. I actually work and live in a pretty rural/college area.
However if I tell you, in order to qualify for my $6.00 Steak dinner you have to do the following
-Be at a predetermined restaurant at 5:00PM on Tuesday
-Prepay $6.00
-Showup in a red shirt
-Be over 60 inches tall
-have a 620 Fico score
Then when you show up on Tuesday tell you "Sorry but someone was more qualified and I am going to keep your $6.00, have a great day". I am pretty sure you would have something to say.
Personally by following the first available applicant it honestly keeps me out of trouble. Having a rigid set of criteria that you follow applicant by applicant helps to protect my business. In 3 years I will not have to explain why 2 people of this race got denied while this other person didn't and 9 months ago a person of this faith was rejected because.... oh who were they up against again and what was the difference again... Standing there one day when asked "How come you have never rented to a (insert protected class here)" by a government inspector
My answer is very simple "Here is my criteria and I take applicants in order as demonstrated by my records". If they start digging I am already in compliance. If I am trying to go well this one time when (insert protected class) was in there was someone with a cleaner car and this other time there was some guy who was at his job 2 weeks longer. Another time I didn't choose them because..
I don't care how someone else wants to do it (and would never say anyone is wrong for doing what they think is best for their business) and you have to run your business as you think it is best. Personally I fear a lawyer more than a qualified applicant and would rather hedge my bet on the first applicant that meets my standards, then trust a lawyer won't talk someone into starting a "fair housing" dispute with me in an effort to get what I own.
Isn't having a felony on your record considered a "disability" in some states now so you can't be prejudiced against that?
The reality is that if you are a responsible landlord concerned with reducing your financial risks and you do not at times discriminate then you are not a responsible landlord concerned with reducing your financial risk.
I always choose the applicant that is most qualified and as a result not only protect my business but also protect all my tenants by not putting my business financially at risk.
Any landlord that would choose to select a less qualified candidate only to respect anti discrimination laws has either not understood how to screen or chooses to set very low screening standards.
It is very easy to legally discriminate as many have pointed out already.
It should never be the case where the law places your business at financial risk. Smart business investors know that laws easily bend without breaking.
I'll try a real example so that maybe I can make my point.
An applicant applied for out NC apartment, a $695 rental. Their 'income' is SSI and they get a check for $733. They do not work, officially, but she does get unofficial assistance of about $200 /month. Via SSI, Eastern Carolina Payee Services, Inc pays the landlord directly. This is the automatic subsidy, similar to S-8 w/o the overhead.
I denied the applicant here in NC because they did not make 3X the rent. Honestly, when rent is 74% of your 'income', I don't know how anyone would feel comfortable renting to the applicant. I think it is immoral to put someone into such financial hardship.
Now let's look at a Seattle landlord. By law, the landlord must apply income screening criteria (such as an income to rent ratio) in a manner where the payment subsidy ($695 of $733) is reduced from monthly rent ($695). The rent is $0. The payment to the applicant per month is $38. So the applicant passes the income requirement by Seattle definition.
The government is forcing landlords into taking applicants where the applicant has virtually no possibility to succeed.
BTW, I routinely have county officials tell me that their placed applicants "easily" meet the payment qualifications for our efficiency apartments. $525 rent, $733 SSI payment. They use the same algorithm as Seattle. My algorithm is $525*3 = $1575.
No, the ordinance is talking about Section 8 vouchers regarding the 3X rule. It means the tenant only has to show they make 3X their portion of the rent. It doesn't apply to SSI recipients.
SSI is actually income that is very reliable.
The laws in the original post are laws that are in effect in CA - at least as far as not being able to discriminate based on source of income. And the other regarding processing applications in order, is just what's been suggested as the best way to avoid a fair housing claim anyway.
I do agree with @Greg S that there is virtually no enforcement of discrimination laws, unfortunately.
But, even in CA, source of income was never an issue for me, because tenants with "iffy" sources of income, never met my criteria anyway. And I wasn't "trying" to make them deniable. Credit is usually the issue.
There's a crazy council member in Seattle, though, who loves to see herself in the news. The one law she got passed that I think really is crazy, is the one we discussed in another thread, where tenants are encouraged to report their landlords for housing violations, and if they do so, they can withhold rent or avoid eviction or something crazy - I'm forgetting the details. But, yes, she's doing her best to get rent control in Seattle, and since she can't do that because of the state laws, she's working as much black magic as she can to try and create the same result as rent control. She's scary.
Hi Sue, I think Chris has the point which is that if the Section 8 voucher covers all the rent, then technically the tenant would need to have $0 income. I understand the logic that rent is paid, but the tenant still has utilities, food, clothing and other expenses. Putting someone in your property who has no money will not turn out well. Other sources of income like SSI would still fall under a 3X rule, so it seems housing vouchers are the main risk. I will just say that living in my houses take more money than just rent, in the order of 20% at least.
Any time you are investing in liberal areas, expect legislation like this. It is the liberal mindset of equality for all and business is evil. You have politicians that have never run a business and they just see the landlord as the enemy. If you want to avoid it - invest in red states.