Raising Rent for Deleading

8 Replies

I've brokered lots of rental deals where the tenant is requesting the landlord to do extra work or make improvements. Could be installing a dishwasher or laundry, refinishing floors and painting, or even more extensive like requesting a newly renovated bathroom or kitchen. Sometimes these negotiations do not result in a rent increase, sometimes they do. It usually depends on what the asking rent was to begin with (if it was already at full market or discounted because of the flaws) and also the overall cost of the improvement/renovation and what that does to the fair market value. For instance, a landlord I know had a unit at first was going to be offered as is for $1800 but after a $45K renovation upped it to $2500.

So, where I'm going with this is: is it fair to also increase the rent if a tenant requests the unit/building to be deleaded? I know in my state, the laws says the landlord may not "retaliate." But such a rent increase should not be considered retaliation. And the reason is simple: in Massachusetts, for one, all houses built after 1978 (when lead paint was out lawed) generally have a higher fair market value, even compared to a newly renovated unit built in, say 1975. And the reason for that is "lead free" or "deleaded" units are more marketable. That segment of the market is grossly undersupplied but well-demanded. Additionally, the cost to delead can sometimes exceed $10K---which is like putting in a new bathroom.

I think most agree that if they could rent a unit for $1700 with an old bathroom, they should be able to get $1800-1900 with a new $10-15K bathroom right?

So what would you say about the value of that same apartment, $1700 lead unknown---is it worth $1900 or so with a deleading and lead certificate?

Is this fair? Legal? I can't really find the answer elsewhere.

@Robert Ortiz  I don't know that this is specifically addressed in law, but if you're renting a unit where a child of 6 years old or younger is going to live, you are required by law to de-lead - and you are not allowed to refuse to rent to a family with kids because your unit isn't de-leaded.

As to fairness, I'm generally pro-landlord (especially given the wildly tenant-friendly laws in MA!), but in a certain respect, a rental that's not de-leaded simply isn't up to current standards.  

It doesn't seem fair to add an extra burden on the tenant to bring the property condition up to where it should be.

I am not in your area but I agree with @Charlie MacPherson .  I would not agree with an immediate rent increase.  However, if what you have said is true about your area and the de-leading truly making it a more marketable property then at the NEXT lease signing an increase may be reasonable.  If they do not wish to resign you can then advertise the de-leading that was performed in your listing to help bring in your higher rent.

By my count, at least 80% of the housing I come across is not deleaded. I would say there's an ideal standard and the actual one.

To your second point, about fairness to the renter---as it stands, regardless of the law, regardless of the effort of the renter or the agent, in many cases, the landlord finds another reason not to rent to avoid the deleading cost. And the tenant must continue on down the road until they "get lucky."

I've looked at this situation for years. I know it's not legal, but I also understand that for some landlord it maybe cost prohibitive. I joke about it sometimes that because so many houses still have lead, this problem basically makes Masschusetts one large Superfund site. But I wouldn't count on funds being set aside for that anytime soon.

So I've been exlporing other ideas that I can pitch to landlords to help get the lead out.

@Robert Ortiz I'm with @Charlie MacPherson It's not the tenants job to keep the rental habitable. I'm generally pro landlord as well but if you buy an older non de leaded property why the heck should the tenant pay to bring it up to standard? Would you charge him for new plumbing or wiring as well? RR

I'm confused as to your job, are you a professional rental agreement and concessions broker?

I'd make sure the rental was adequate to the tenant on move in, then ignore about 95% of these spurious and persnickety tenant requests you list here. It's like these guys overpaid for a mystery hotel room on Hotwire and are now complaining to the front desk because they think they should be at the Four Seasons hotel and not the Howard Johnson's room they paid for

If the building tests positive for lead-based paint, and you are in a state or jurisdiction that requires you to take measures to delead your property, then by all means do. The cost for such would not be something you would pass on to an individual tenant, but rather something you would factor into the cost of doing business. If you are in a highly regulatory state or a place where lead-based paint is more prevalent, such as Massachusetts, then the cost of doing business would be higher, so it stands to reason that rents would be higher as well.

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About lead based paint....first determine if it exists in the building.

If you look into the history of lead-based paint, it's use had dropped off sharply in the United States after the problems associated with it became known. It's use peaked in 1922 and by 1940 it's use was on the way out. There was some legislation enacted to curtail its manufacture and use, long before 1978. Some paint manufacturers voluntarily stopped making it early on. But because some lead-based paint was still found in warehouses and was available for use, and because enacting comprehensive legislation took a long time, the 1978 date is what we have to deal with.

Many homes built before 1978 do not have lead based paint. The prevalence of lead-based paint can vary by region, with the Northeast being at greater risk, with many more historical buildings and older homes, compared to other places.

All of our properties are in the Pacific Northwest and were built prior to 1978. We tested them. We only found lead-based paint in the 1925 and 1941 houses. The buildings built in 1950, 1956, 1964, 1967, and 1973 did not have lead-based paint.

The lead-based paint in the 1925 and 1941 buildings was buried under many layers of lead-free paint and only appeared on the main floor. Because of the repair and replacement of windows over the years, most window sills were new wood, painted after 1978.  Basements, attics and outbuildings that were finished later also were lead-free.

If there is no lead-based paint in the building, you would have nothing to delead.

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I'm no expert, but I did take the EPA's Renovation, Repair and Painting course and got my certified renovator card. I recommend the EPA course for anyone who works on older buildings or oversees others who work on older buildings. As a property owner, it pays to be knowledgeable about this stuff, even if you hire contractors to do the work.

It behooves landlords to become familiar with techniques used for lead testing, lead inspection, lead abatement and deleading. Learn what it means to encapsulate, contain/enclose, remove, or replace building parts that have lead. You can find many videos online that cover this and official documents from different jurisdictions to guide you.

Here are some links to relevant information:

https://www.thisoldhouse.com/how-to/how-to-remove-...

http://www.mass.gov/eohhs/docs/dph/environmental/l...

http://www.masslegalhelp.org/housing/private-housi...

@Robert Ortiz I agree with the 80% number you mention. A majority of units in Massachusetts are not Lead Certified. Receiving the Lead Certification is typically a major hurdle as most buildings were built in he early 1900's.

I would argue that a building is significantly more valuable if you have a Lead Cert based on the fact that it opens you up to a broader tenant base. 

My advice would be to complete the lead work prior to placing an available unit on the market.

Deleading is a tricky issue. It doesn't necessarily increase appraisal or rents. If in your opinion it would increase rents simply delead it when empty and charge an accordingly higher rent.

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