“Next to bombing, rent control is the most effective technique so far known for destroying cities.” Assar Lindbeck, former Professor of Economics, Stockholm University
Portland Mayor Ted Wheeler has apparently decided that rental property owners are second-class citizens.
At a Tuesday, Sept. 8 news conference, Wheeler announced a proposal to require landlords to pay tenants relocation money if they raise a tenant’s rent by any amount. That’s right — any amount. The proposal is expected to be considered by the Portland City Council on September 16. If approved, it would go into effect immediately and stay in effect at least until the end of 2020.
Under current rules, Portland landlords are required to pay $2,900 – $4,500 to assist tenants with moving expenses if their rent is raised by 10% or more over a 12-month period.
There’s also a state law in place that limits rent increases on properties that are more than 15 years old to no more than 7 percent per year, plus the annual change in the consumer price index. Under Wheeler’s proposal, the state’s limit would be moot.
“Right now, with thousands of renters not able to pay their current rent, it’s likely that any rent increase would force renters to have to relocate,” Wheeler said. “While we’re in the middle of this pandemic, we need to do our part to protect renters from the tidal wave of evictions that we know is coming.”
As for protecting landlords, many of whom are small property owners, Wheeler seems to be making the assumption that all landlords have such deep pockets they can easily cover any escalation in their costs during a moratorium on rent increases.
He appeared to understand the problem when he said on Tuesday he opposed proposals to cancel rent during the pandemic, saying that would just burden property owners, but his new proposal would clearly burden property owners as well.
Landlords probably won’t garner much sympathy from the progressives who see landlords as exploitative villains and are likely to enthusiastically back Wheeler’s proposal. So it has a good chance of passing, continuing Portland’s slide down the slippery slope of rent control.
If it passes, it will be one more disincentive for investors to put their money in rental housing. As the National Apartment Association points out, that would further limit the availability of affordable rentals, increase the cost of all housing by forcing a growing Portland population to compete for fewer housing units, and reduce the quality of rental housing. In other words, it will harm the very community it purports to help by limiting accessibility and affordability.
Earlier this year, I wrote that Oregon real estate interests would rue the day state rent control became law because the pleas of tenant groups for even tougher rules would accelerate and progressive politicians would respond.