Oregon, first state wide rent control
Most Popular Reply
Rental Property Investor · Littleton, CO · Member since 2014 · 150 posts · 114 votes
7yI think it will be interesting to see how this plays out. I looked up the one year increase in 2017 in Seattle and Portland, one was 3% and one was 4%. The newly allowed 7% plus inflation (2018 was 1.9%) is higher than rent has risen over the past year.
As a landlord in I currently haven't raised the rent on good tenants for the first renew, and if I do after the second it isn't for 7% year. Turnover is more expensive than the extra money from a rent increase. However, if I was in OR I would automatically raise the max allowable per year. I wouldn't want to get stuck after 4 years with the same tenant and modest increases without the option to raise to market rent for a new tenant, especially after incurring make-ready costs and vacancy associated with finding a great tenant. In my mind year over year of 7% increases (without inflation added) is hefty, $105 per year on $1500 rent. I'm guessing rents end up skyrocketing over time in OR, historically rents have risen about 4% nationally. Landlords have a good anchor for raising the max allowable - it is allowed by law. I'm not sure this law will help tenants keep rents low. Eviction seems like a thornier issue for landlords with the new regulations.
50 Replies
- Rental Property Investor · Wenatchee, WA · Member since 2018 · 99 posts · 103 votes7y
Heard about this on the Radio and listened to Kate Brown say more must be done. While I don't live or in invest in OR, I'm interested as a neighbor next door. 7%/yr seems better than what it could have been. I'm not sure rent control is the solution to affordable housing. Markets are pretty good at responding to supply and demand naturally. Having said that I find the eviction component a little more concerning. I suppose investors are going to need to do even more diligence than ever to offset the risks associated poor tenants.
- Rental Property Investor · Salem, OR · Member since 2017 · 696 posts · 660 votes7y
I was explaining this to a couple of local investors regarding some of the regulations they are passing in Oregon. Regulation will put downward pressure on supply which will exacerbate the housing "crisis" in Portland Metro which will mean less competition and higher long term rents. Some (current tenants who are lucky enough to get some of the benefits) will be paid for by higher costs long term for renters. Bring it on, I am much more worried about a 200 unit apartment building coming in down the street than only being able to raise rents 7% + CPI per year.
This is something I sent to a local charity we have supported (oregon food bank) which decided to come out in support of the bill.
My last point is this, rent controls and tenant protections lead to decreased supply and strengthen both the pricing power, average rents and value of the owner's of existing properties. I.e. from a financial standpoint we BENEFIT from these restrictions just as existing owners in San Francisco, LA, NYC, Cambridge have. This will make us quite a lot of money. My point is that your support is doing the exact opposite of what you think it is.
The conclusion from the paper."Rent control appears to help affordability in the short run for current tenants, but in the long-run decreases affordability, fuels gentrification, and creates negative externalities on the surrounding neighborhood. These results highlight that forcing landlords to provide insurance to tenants against rent increases can ultimately be counterproductive. If society desires to provide social insurance against rent increases, it may be less distortionary to offer this subsidy in the form of a government subsidy or tax credit. This would remove landlords’ incentives to decrease the housing supply and could provide households with the insurance they desire. A point of future research would be to design an optimal social insurance program to insure renters against large rent increases."
- Rental Property Investor · Littleton, CO · Member since 2014 · 150 posts · 114 votes7y
I think it will be interesting to see how this plays out. I looked up the one year increase in 2017 in Seattle and Portland, one was 3% and one was 4%. The newly allowed 7% plus inflation (2018 was 1.9%) is higher than rent has risen over the past year.
As a landlord in I currently haven't raised the rent on good tenants for the first renew, and if I do after the second it isn't for 7% year. Turnover is more expensive than the extra money from a rent increase. However, if I was in OR I would automatically raise the max allowable per year. I wouldn't want to get stuck after 4 years with the same tenant and modest increases without the option to raise to market rent for a new tenant, especially after incurring make-ready costs and vacancy associated with finding a great tenant. In my mind year over year of 7% increases (without inflation added) is hefty, $105 per year on $1500 rent. I'm guessing rents end up skyrocketing over time in OR, historically rents have risen about 4% nationally. Landlords have a good anchor for raising the max allowable - it is allowed by law. I'm not sure this law will help tenants keep rents low. Eviction seems like a thornier issue for landlords with the new regulations.
- Rental Property Investor · Salem, OR · Member since 2017 · 696 posts · 660 votes7y
@Gretchen P. @Andrew Gingerich @Robert M.
In the article I linked, which is the Brookings Institute, which is Liberal/Moderate leaning (not that it much matters but this type of policy seems to be pushed from the left) essentially said that if the desire was to provide insurance against rate increases for "disadvantaged" renters then that should be down through public assistance not by imposing the costs on the creators of the housing stock. Assuming that there will not be a negative impact on construction by adding additional barriers to building in an already difficult area to build ( I am looking at you PDX) is just not logical. Capital is liquid. A large builder of multi-family can go to Boise, Denver, TX and not have the issues.
As I mentioned, as EXISTING owners, if we are patient and wait for the long game (limited supply continuing increases in population) and follow the law like Gretchen said (i.e. automatic 7%+CPI increase every year) then it will long term be a BIG win for owners. I am already talking to our attorney about writing the max allowable rent increase automatically into the lease every year. Hey, its the LAW ;)
- Rental Property Investor · Littleton, CO · Member since 2014 · 150 posts · 114 votes7y
@Richard Sherman - I don't think Colorado is far behind on this.
- Investor · Dundee, OR · Member since 2016 · 104 posts · 162 votes7y
I too think Colorado is not far behind, then California,then Washington,ect.
I worry once rent control is established it becomes a slippery slope. Seven percent could soon become five percent then two percent. Then there is the relocation fees, now at one months rent. Oregon eliminated no cause evictions as well. I worry socialist government is beginning to be accepted as the new normal, I pray im wrong. Such a different State/country than when I was younger.
I feel that if the state of Oregon wanted to help improve the affordable housing issue they could do something about land use laws, 40k dollar permits to build a SFH, taxes, or ADU's.
Instead they disincentivize with more regulations.
Sorry about the rant, but im very disappointed as to how real estate investors are being portrayed within our society.
Before rent control, I would take a chance on a tenant who was a little shady in ways, but now with no cause evictions gone I will NEVER accept anything less than our criteria as per the law.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Richard Sherman for me as a non landlord but a new home builder in Oregon this is going to cause landlords to max out rent.. which will then create more buyers for my homes as rent becomes the same as or more than mortgage payments.. ???? Maybe right ?
the other thing to be cognizant of the largest rental market in Oregon is Portlandia proper and last year they passed a law that new construction over 20 units Must include low income housing units.
well mad rush to get projects through and we are seeing them built every where.. so they can charge market rent for brand new units then go up 7% or what have you per year..
However in the last 16 months guess how many applications for new 20 units and up have come into the city.
ZERO not one.. so now bigger players are not going to be building new stuff at least for while..
I still like the tax credit for lower income and the state should be floating those bonds there is a massive market in the secondary world for that stuff that's how this should be handled in my mind.
- Engineer · Portland, OR · Member since 2014 · 1k+ posts · 1k+ votes7y
@Andrew Gingerich I agree that the tenancy restrictions are a lot more ominous than the actual rent increase limitations.
I’m curious if anyone knows if this statewide law supersedes the local regulations we have in Portland? If they just use this new statewide law as a base to build upon with more restrictive ordinances locally then things can get much worse.
- Lender · Vancouver, WA · Member since 2015 · 482 posts · 316 votes7y
I don't understand what all the hubbub is about. To me it is all wasted commotion.
As a Realtor, higher rents help fuel more buyers, since they want lower housing costs, but there is little low-end stuff to buy, so that keeps that market swift.
As a small potatoes SFH landlord in WA (I know it is an OR rule), these rental increase regs and notices are similar the tenant law here, so that is no big deal. Being a landlord is a business, not a giveaway. Basic, my tenant pays or I evict, or for violations. I raise rent to cover costs and increases. So considering the max increase, 7%+2.2CPI 2018 = 9.2%, that means that I can raise my rent more than $160 per month next year and this will be standard for many landlords looking to max rents, woohoo! And if the tenant or soneone else wants to buy it? Go for it, 1031 or QOF here I come!
- Investor · Dundee, OR · Member since 2016 · 104 posts · 162 votes7y
Originally posted by @Steve Milford:
I don't understand what all the hubbub is about. To me it is all wasted commotion.
As a Realtor, higher rents help fuel more buyers, since they want lower housing costs, but there is little low-end stuff to buy, so that keeps that market swift.
As a small potatoes SFH landlord in WA (I know it is an OR rule), these rental increase regs and notices are similar the tenant law here, so that is no big deal. Being a landlord is a business, not a giveaway. Basic, my tenant pays or I evict, or for violations. I raise rent to cover costs and increases. So considering the max increase, 7%+2.2CPI 2018 = 9.2%, that means that I can raise my rent more than $160 per month next year and this will be standard for many landlords looking to max rents, woohoo! And if the tenant or soneone else wants to buy it? Go for it, 1031 or QOF here I come!
Keep in mind that most people who rent from me are doing so because they simply dont qualify for a mortgage. This could be different in your area. Less rentals on the market could only add to the homeless problem, which adds to more regulations. I personally dont like government telling me how to run my business.
- Rental Property Investor · Salem, OR · Member since 2017 · 696 posts · 660 votes7y
@Robert M. I agree 100% with the comment on the costs for building with fees, studies etc and how difficult it is. This is just pushing the blame for the housing crunch which at least in part was caused by all of the restrictions and regulation by PDX specifically onto the "evil landlord." It is fine, please continue to disincentivize the only thing that will lower rent growth long term which is more supply. If it was legal to PAY to stop competition from the building I would do it. I am a bit of a contrarian. I LIKE regulation, inspections (like we have in Salem and PDX) etc as I know that a percentage of the other owners either can't or do not want to deal with it and they get out of the business. I just assume I can do it better and cheaper so it becomes a benefit for me as it reduces supply and as long as we have the continued growth the pressure is up and up for rents.
- Rental Property Investor · Salem, OR · Member since 2017 · 696 posts · 660 votes7y
@Jay Hinrichs 100% correct, rents will continue to push up, but I am not sure how many people become buyers strictly because of pricing that would not have been buyers at a slightly lower rent. There is enough positive reasons to buy (image, people telling them it is the best thing to do, tax incentives, space, control of costs etc) that I think unless there is a massive disconnect between rents and values (like in Vancouver BC) then people will move to be owners anyways. Most of our rental pool are younger, older with fixed income, not permanent residents or people who can not qualify for various reasons to be buyers...or do not want the hassle of owning and like the flexibility of renting.
The homeless thing is disingenuous I think to a degree. A huge percentage of that is substance issues, mental issues etc. The temporarily homeless I think could have some due to rent increases, but the idea that someone says they will go live in a car instead of moving 40 miles to a place where the rents are far lower than PDX rings false.
I heard the same on the new building in PDX...and now they are scrambling to try and incentivize it...no parking requirements, tax breaks etc. Nice work Portland, way to totally mismanage the situation for the past decade.
- Rental Property Investor · Salem, OR · Member since 2017 · 696 posts · 660 votes7y
Originally posted by @Steve B.:
@Andrew Gingerich I agree that the tenancy restrictions are a lot more ominous than the actual rent increase limitations.
I’m curious if anyone knows if this statewide law supersedes the local regulations we have in Portland? If they just use this new statewide law as a base to build upon with more restrictive ordinances locally then things can get much worse.
Essentially whichever law is more strict will win. So in PDX you follow the local ordinances with the State law as a baseline minimum. Much like the minimum wage laws.
- Rental Property Investor · Salem, OR · Member since 2017 · 696 posts · 660 votes7y
@Steve Milford I agree 100%. I do not mind the rules. I am not evicting paying tenants anyways. Those are your big repositioning plays where they evict the entire building, rehab and re-rent. I see this as creating some opportunities where mismanagement and lower rents that cannot be rapidly remedied create some discounts...hopefully...
As long as everyone has to follow the rules, I am confident I can play by them better than others and make money doing it.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Richard Sherman:
@Jay Hinrichs 100% correct, rents will continue to push up, but I am not sure how many people become buyers strictly because of pricing that would not have been buyers at a slightly lower rent. There is enough positive reasons to buy (image, people telling them it is the best thing to do, tax incentives, space, control of costs etc) that I think unless there is a massive disconnect between rents and values (like in Vancouver BC) then people will move to be owners anyways. Most of our rental pool are younger, older with fixed income, not permanent residents or people who can not qualify for various reasons to be buyers...or do not want the hassle of owning and like the flexibility of renting.
The homeless thing is disingenuous I think to a degree. A huge percentage of that is substance issues, mental issues etc. The temporarily homeless I think could have some due to rent increases, but the idea that someone says they will go live in a car instead of moving 40 miles to a place where the rents are far lower than PDX rings false.
I heard the same on the new building in PDX...and now they are scrambling to try and incentivize it...no parking requirements, tax breaks etc. Nice work Portland, way to totally mismanage the situation for the past decade.
rent has very little to do with homeless my dad hired the homeless in the 60s. to put out his marketing pieces ( yellow letters) then they were called wino's and hobo's lol.. then we got politically correct and now they are homeless.. which these guys and gals were not they would sleep at the Y or the WY or any number of other shelters.. ( this was San Jose in the 60s) .. I think there is a definite correlation when rents get to high that younger or credit worthy will jump to housing.. this whole thought of a 100k a year millennial renting because they don't want to be tied down is going to die out.. as they realize they are throwing money away.. We have owned a few rentals over the years and had many folks move out as they were buying.. Almost all of my A class rentals in the deep south I either sold the tenant or they bought a house and moved.. so I know it happens.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Richard Sherman One of my partners owns a 100 units in Gresham.. i actually found them and brokered the deal.
We have on going business so when he comes twice a year to meet with me ( he lives in Honolulu) he also does a day with his property manager at Cambridge management super sharp guy and fun.. cut his teeth at Guardian.
Anyway I suspect Passadore will do a deep dive into this as he managed 5 thousand doors in Oregon and give a written memo to all his owners.. I will ask my client for a copy when he gets it.
however i think this is about 5 years to late to really affect anyone i know Passadore has pushed rents the last 5 years for my client so 10% a year form here on out would be more than sufficient to keep growing his values..
- Rental Property Investor · Salem, OR · Member since 2017 · 696 posts · 660 votes7y
@Jay Hinrichs It is going to hurt the people who do not move rents each year and push what they can and have not in the past. 10% a year is more than we raise unless we are taking over a property with low rents. What it will do is ensure rents get raised EVERY year on everyone, even people who have been there a long time and are good tenants, because if THEY leave then that unit can only be raised the allowed amount for the new person moving in who would essentially be benefiting from the old behavior of the good tenant. Well done Oregon, now everyone loses :)
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Richard Sherman:
@Jay Hinrichs It is going to hurt the people who do not move rents each year and push what they can and have not in the past. 10% a year is more than we raise unless we are taking over a property with low rents. What it will do is ensure rents get raised EVERY year on everyone, even people who have been there a long time and are good tenants, because if THEY leave then that unit can only be raised the allowed amount for the new person moving in who would essentially be benefiting from the old behavior of the good tenant. Well done Oregon, now everyone loses :)
agreed unintentional consequences or to say it another way a bone head move with no realization to what the free market will do or will react like. :)
- Investor · Dundee, OR · Member since 2016 · 104 posts · 162 votes7y
The Oregon hits just keep coming.
Oregon legislative bills introduced and being considered this Legislative session.
HB 2001 middle housing in single family zones will be a must.
HB 2256 task force for low income housing
HB 2343 allows political canvassing in facilities, such as manufactured homes.
HB 2461 Created temp stay of eviction for certain low income tenants.
HB 2478 Requires eviction judgment and writ of restitution to authorize sheriff to enforce evictions.
HB 2513 Requires all landlords to provide voter registration to new tenants.
HB 2518 Requires prorated rent based on full days of occupancy.
HB 2540 Requires cities to establish standards to help housing stability.
HB 2596 Allows cities and counties to impose stricter rent control.
HB 2597 Requires establishment of dispute resolution of proposed rent increases in facilities.
HB 2263 Requires review of building code to identify provisions that inhibit conversions of SFH to multifamily.
HB 2664 Extends sunset of tax credit for closing of manufactured dwelling park.
HB 2683 Prohibits landlords from charging additional rent or fees of any kind for pets. Service animals are already exempt from extra fees/rent.
HB 2764 Prohibits landlords from asking or requesting criminal history information prior to completed screening.
SB Limits landlords to single applicant screening charge per applicant when applying to rent multiple units and Requires full refund of application charges if applicant qualifies but isnt offered the unit.
Just thought some of you might find this interesting to read.
- Investor · Dundee, OR · Member since 2016 · 104 posts · 162 votes7y
There will be excise tax on ALL new homes in Newberg Oregon, to help fund affordable housing. There are so many changes being proposed I dont want to list them all, but it sound like the state/government is going after the builders as well. I can only assume other city planners will follow suit. The next couple years could get interesting. There are several landlords that plan on selling(as per a large property management company in Salem Oregon) due to all the new regulations.
- Rental Property Investor · Jersey City, NJ · Member since 2011 · 1k+ posts · 876 votes7y
Originally posted by @Richard Sherman:
@Robert M. I agree 100% with the comment on the costs for building with fees, studies etc and how difficult it is. This is just pushing the blame for the housing crunch which at least in part was caused by all of the restrictions and regulation by PDX specifically onto the "evil landlord."
I don't think this law is the end of the world, but I was incredibly annoyed reading this quote from the Governor:
“A lot of people blame the state’s land-use laws, but if we didn’t have land-use planning, we would not have a wine industry, because houses would have been built on those southern-facing slopes” where there are now vineyards, said Ms. Brown, who has been governor since 2015.
JUST ADMIT THAT'S THE CHOICE YOU MADE, VINEYARDS OVER AFFORDABLE HOUSING!!!! Not such a good slogan though, is it? I get so tired of reading housing articles that never mention density and zoning as issues. Just mean, greedy, landlords.
- Lender · Vancouver, WA · Member since 2015 · 482 posts · 316 votes7y
Something to consider... After "new costs" become commonplace, they always end up being borne onto the shoulders of consumers. i.e. Minimum wage goes up then prices go up. Portland, and then the state, enacts rents control then rents go up. If tenant selection becomes more restrictive, rents will go up.
No I don't enjoy the government telling me what to do, but Portland and legislators in Oregon as a whole has always been an anomaly and makes weird laws (I lived there for 35 years). So I don't worry about it much. It has long been in a fight of the haves (whom mostly come from somewhere else with experiences of higher standards of living) and the have nots (whom have a hard time affording any housing they choose). In the end, it gets a little more messed up every year.
If the city, and state, wants to make weird laws, so what? Housing will only get more expensive.
- Investor · Portland, OR · Member since 2016 · 2 posts · 3 votes7y
7% plus "cost of living" increases is a decent number to work with in my book. Before rent control in the years that I did do a rent raise it was always 2-4% or nothing at all. Having been a tenant and an owner under rent control (Santa Monica, CA where the city dictated the amount of increase on a yearly basis) the culture around renting turns into expecting that rents will raise each year no matter what even if a nominal amount. So for most properties around the city I think it will be an overall positive for the building owners and speculators. Working within a 7-10% margin should be very doable and if it's not owners will charge a separate premium for parking/laundry/water/etc... to make up any difference.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Robert M.:
There will be excise tax on ALL new homes in Newberg Oregon, to help fund affordable housing. There are so many changes being proposed I dont want to list them all, but it sound like the state/government is going after the builders as well. I can only assume other city planners will follow suit. The next couple years could get interesting. There are several landlords that plan on selling(as per a large property management company in Salem Oregon) due to all the new regulations.
Ah i am going to ask my buddy Marc Willcutts about excise tax in newberg thats a new one.
although keep in mind this is all pork barrel i have one in there also hopefully it slides through :)
most of these are OK. i dont like the criminal and i dont like the dog
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Johann Jells:
Originally posted by @Richard Sherman:
@Robert M. I agree 100% with the comment on the costs for building with fees, studies etc and how difficult it is. This is just pushing the blame for the housing crunch which at least in part was caused by all of the restrictions and regulation by PDX specifically onto the "evil landlord."
I don't think this law is the end of the world, but I was incredibly annoyed reading this quote from the Governor:
“A lot of people blame the state’s land-use laws, but if we didn’t have land-use planning, we would not have a wine industry, because houses would have been built on those southern-facing slopes” where there are now vineyards, said Ms. Brown, who has been governor since 2015.
JUST ADMIT THAT'S THE CHOICE YOU MADE, VINEYARDS OVER AFFORDABLE HOUSING!!!! Not such a good slogan though, is it? I get so tired of reading housing articles that never mention density and zoning as issues. Just mean, greedy, landlords.
what utter non sense.. the wine country in Oregon is no where near were you would do any kind of dense housing.. even if you could.
I have logged many of those vineyards over the years and you have the forestry department whining that we are taking away prime forest land just to grow grapes to sell to the rich and famous who pay 100 dollars a bottle for wine ....
The wine industry is real though.. I grew up in Napa.. its multi billions and Oregon is 25 years behind Napa but slowly catching up.
its good for farm workers and some retail.. what you get though is tons of restaurants that could no way exist in these areas can make a go of it plus hospitality and i bet STR really work too in the Dundee hills were its all county and there I am sure is no restrictions at least not yet. unlike Napa and Sonoma counties highly restrictive STR regs
Oregon land use while highly restrictive in the farm forest ag land .. if your in the city and zoned its some of the easier places to pop up 50 homes anywhere on the west coast.. not simple but nothing like CA or parts of WA.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.