Apartment owners have a very important election 2024, including the potential fate of yet another rent control measure on the ballot- the Justice for Renters Act. The two main devastating goals of this initiative:
Undo Cost-Hawkins and rent control new apartments and single family residences.
Enact Vacancy Control so landlords cannot get market rent upon vacancy.
This measure would drastically impede any progress the state is making towards creating more housing. It would slow down new development as new units would face more stringent regulations. Existing housing stock that wasn't removed from the rental market would fall into further disrepair as landlords would run out of funds to make ongoing repairs and have no upside from capital improvements or unit remodels if they cannot gain market rent.
A larger and often overlooked aspect of this is that it makes it harder for mom and pop landlords to operate. It forces current mom and pops to sell, thus cutting off generational wealth. It raises the barrier of entry for first generation buyers who want to partake in multifamily investment. All these restrictions set up the playing field for larger, corporate landlords who can withstand the volume of regulation by the shear volume of units under ownership.
In the long run drastic rent control measures like what is being proposed under the Justice for Renters Act would dwindle private property ownership and put the majority of housing stock into the control of corporations, wiping out a large portion of middle class. Corporations that would gain all tax breaks, all upside, all equity, and then be able to pay to have regulations reversed in their favor.
As apartment owners, it is more crucial now than ever to engage in ongoing talks with legislatures. If you are in Los Angeles- AAGLA works diligently on making it easy for you to track and partake in property owner advocacy. The California Apartment Association makes efforts on a state wide front to push for property owner rights.
I recently watched a three part series with landlord-tenant attorney Mike Brennan on the upcoming changes in the law pertaining to apartment owners. He goes into the global picture of the future difficulties for mom and pop landlords to remain as housing providers. Part 1 / Part 2 / Part 3. The videos were pretty eye opening.
The above should be enough food for thought.
The information in this post is for general information purposes only. Nothing on this post should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.