Is the Landlord Fairness Code Fair to Landlords

The debate around the recently passed Landlord Fairness Code has sparked heated debate. One side won their campaign by marketing it as legislated accountability. The other side says that tenants are not held accountable at all.

Tacoma Initiative 1 was on the ballot as an initiative in Tacoma on November 7, 2023. It was approved. Tacoma for All, the organization that sponsored the initiative, called the initiative ” protection against predatory investors.” While aiming to protect tenants, this initiative brings notable changes for property owners. Some of the key aspects of the new law are that:

• Landlords are required to be in compliance with health and safety laws prior to evicting a tenant or increasing rent; 
• Unfair or excessive fees as defined by the law are prohibited; 
• Landlords are required to provide two notices before increasing rent (first between 210 and 180 days prior and second between 120 and 90 days prior);
• Landlords are required to pay relocation assistance if the rent increase is above 5% equal to two months of rent (or higher if the increase is above 7.5%); 
• Evictions between November 1 and April 1 are prohibited; and 
• Evictions of members of the military, first responders, seniors, family members, health care providers, or educators are prohibited.

How are landlords going to be affected by these shifts in the rental landscape is still to be determined but it is important to recognize the challenges some landlords, particularly small landlords may face with the provisions that are now in place.

One of the primary implications for landlords is the strict adherence to tenant protection laws. Landlords must now ensure complete compliance with the landlord duties enumerated in RCW 59.18.060 and Tacoma’s Building Code TMC 2.01.050. Any violation of these laws can restrict their ability to increase rent and could lead to legal consequences. Unfortunately the assumption is that this law will target wealthy landlords but the truth is that small landlords already operate under delicate balance and this law may have the greatest impact on them. Landlords may feel singled out because tenants are not required to adhere to basic tenant responsibilities in order to prevent eviction. Unfortunately, there may be some embolden tenants who use the new law to avoid eviction while failing to pay rent or maintain the premises.

The requirement for advanced notice of rent increases adds an administrative layer for landlords. Balancing the need for fair notice with maintaining rental income goals presents a challenge. As the cost of the supply chain increases for landlords, their ability to increase in accordance with market is hindered by the provisions. Additionally, providing relocation assistance for significant rent hikes will keep rent down for tenants but hurt landlords’ ability to get rid of trouble tenants and to provide quality upgrades because the rate of goods may out pace allowable rent increases. Landlords are also expected to provide copies of the request for relocation assistance and confirmation of payment to the Landlord-Tenant Coordinator or other city designated official.

Further, landlords will experience restrictions on the fees they can charge tenants under the new regulations. This includes prohibitions on application fees, holding fees, and pet fees but most inciting of all, landlords cannot charge any fee or charge for late payment of rent that exceeds $10.00 per month, regardless of the cost to the landlord for such inconveniences. While the aim is for a balanced rental environment, landlords may need to carefully consider their pricing strategies and find ways to manage costs, This could impact the quality of affordable rental offerings for tenants as landlords will like have to increase their initial rental price to make sure ancillary costs are covered.

Landlords will likely become pickier about whom they initially rent to, as the process to remove an unwanted tenants becomes even more difficult. For instance, landlords will need to reassess eviction strategies, particularly considering student/school-year evictions and cold-weather evictions. The onus will be on the small landlord to vet tenants thoroughly and look for concerning signs. Because while the initiative sets guidelines to protect tenants and the impetus for the new protection code is to punish investors such as the outside firm that bought Tacoma’s Unionaire Apartments which increased the rent by 60% for hundreds of low-income tenants, there is no carveout for small landlords, who may not be able to afford the financial forecasting required to ensure a smooth process for all parties involved.

The Landlord Fairness Code introduces penalties for landlords found in violation of the rules. While this legal framework aims to protect tenants, landlords may find themselves under increased scrutiny. Small landlords in particular are at risk of being afflicted by these rules. Balancing the need for compliance with potential financial consequences becomes a delicate task for property owners.

The unintended consequence from the increasing restrictive rental environment is the small landlords may end up being pushed out of the market. Opening up more opportunities for investors and real estate trusts to buy up private land, decreasing diversity in the property management marketplace for tenants to choose from, diminishing the availability of housing units for rentals, and eventually increasing the market price of rental units and further eliminating affordable housing. The very opposite of what so many voters are hoping to achieve.

In light of these regulatory changes, landlords are strongly encouraged to proactively seek legal counsel to develop a comprehensive rental strategy. Establishing a relationship with an attorney before placing tenants and having them on retainer or subscription provides landlords with the necessary support to navigate the evolving rental landscape with confidence.

By taking this proactive step, landlords can better position themselves to comply with the Landlord Fairness Code, address challenges promptly, and maintain a fair and sustainable rental business. Reach out to an attorney today to ensure a strategic and informed approach to rental management in Tacoma’s evolving housing market.

Contact The Law Office of Caryn Ragin, Esq. PLLC for a rental strategy plan 253-778-6185 or raginlaw.com.