Spokane considering actions that will force increase in rents
The Spokane proposal will limit rent increases on properties where the property owner has accepted government assistance to offset lost rental income from government lockdowns or eviction moratoriums. While on the surface limiting rent increases (in this case, to the rate of inflation) seems like it would help with affordable housing, the result, will be the exact opposite.
Already struggling with eviction moratoriums, many small property owners have been hit hard by state and local regulations, making owning a rental property as an investment less attractive and increasing costs. The majority of renters, during the pandemic, have continued to pay rent on time, but there are horror stories of renters moving into properties and using the eviction moratoriums as an excuse to spend money that would have been used for rent, for other purchases. Bad renters have taken advantage of the pandemic to get free housing at the expense of the property owners.
Understandably, this is a difficult situation for many honest renters and property owners. Many reach agreements with payment plans or reduced rent as it is nearly always in the best interest of the renter and property owner for the renter to stay in the property.
Property owners who are looking to recover some of the lost rent will be forced to choose between rental assistance with a cap on the amount they can increase rent and being able to raise rents to cover the losses during the pandemic. Many property owners will be required to forgo rental assistance (with the associated cap) as it will result in insufficient revenue to cover the costs of the rental property. Opting for an increase in rent (subject to state law) will be the only avenue to recover lost revenue and in some cases, avoid bankruptcy.
The Spokane policy, if passed, would result in less affordable housing being available and forcing renters to move out of the city limits to find more affordable areas to live in.
Property owners will be inclined to sell rental properties, converting them to a regular home purchase to recover the lost rental revenue. This will decrease the available rental inventory will drive up rental costs making the rental unit shortage and high rent situation worse.
Rent control is not a good public policy and always results in higher rents, fewer rental options and less affordable housing.