Rent Control and How It Affects You as a Landlord
Rent control laws existed over the years, though they differ from one state to another. Additionally, different cities in the same state may have different rent control laws. As such, when buying property in a town, ensure you check up on the local rent control laws.
The Purpose of Rent Control Laws
• One, rent control laws in a place determine how much you can increase the rent of a tenant when their lease expires. The cap on rent increase is dependent on area specifics such as inflation or local costs of living.
• In other places, rent control laws may determine how much a landlord charges as rent. For example, they might dictate that you should charge a certain amount, say, $600, for a one-bedroom rent-controlled apartment.
• Rent control laws might also regulate how frequent a landlord makes rent increases.
• In other areas, rent control laws may state the reasons that may lead to the eviction of a tenant. This means that the laws limit the reasons that could lead to eviction.
What Landlords Should Do When Managing Rent Control Tenants
The impact that rent control laws have on landlords is mostly negative. One, landlords may be in a situation where they are renting out their apartments way below the unit fair market value. Two, collecting less money than the unit demands also means that the tenant may be costing the landlord money. This is because regardless of the situation, the landlord still has to cover all the holding costs related to the unit. These costs are based on the current market prices. The landlord is required to perform repairs if need be, the expenses of the property, mortgage, insurance payments, and taxes. Here is a list of things landlords can do to deal with rent control tenants:
• Charge the Unit
When a tenant moves out of a unit, it becomes deregulated. In this case, the landlord can charge the unit according to the free market rent. However, this may differ depending on states.
• Rent threshold
Some countries have a threshold on high rent. These laws allow for an apartment to become deregulated if it gets to a specific monthly rent.
• High income
When a tenant earns more than a particular income for two years in a row, the apartment can become deregulated. For example, when a tenant makes $200,000 annually, a court may determine that the tenant is in a position to pay rent that is in accordance to the fair market and is thus not eligible for rent control.
• Buyout
The landlord may get the tenant to leave by offering him/her a sum of money. Landlords have been known to offer tens of thousands of dollars to their tenants to get them to move out.
• Eviction
Some landlords attempt to drive out rent-controlled tenants using eviction. Some legitimate reasons to evict a tenant include drug dealing or nonpayment. However, some landlords illegally try to force out their tenants by making false claims.
• Demolition eviction
A landlord can have a rent-controlled tenant moving out by serving them an eviction notice for demolition. Such notices are served when a landlord is looking to conduct extensive renovations of the property, in some cases, tearing down and rebuilding.
• Primary residence
If a landlord wishes to use a rental unit as their primary residence for five consecutive years, some rent control laws allow them to get back a rent controlled unit.
The idea in getting a tenant to move out of a rent controlled unit is that the unit, then becomes deregulated and the rent control laws do not apply. Rent control laws may be greatly limited to you as a landlord, but you can still manage to get your money’s worth from the rental units. If you are looking to have your property managed, look no further. At LAPMG, we offer property management services and leave you to other pursuits. Check us out here.
