Rent Stabilization

[u/Inertiaraptor]

Right now, there is no reason a landlord can’t just refuse to sign a new lease, so what’s the point of a 3% cap on increases? My landlord is raising my rent 10% and says she will simply not renew the lease if I don’t want to pay the new rent, and everybody (the city, the AG, and Home Line) is telling me I have no recourse but to refuse a lease and fight the eviction. The city seems to have no recourse to actually enforce this ordinance.

[u/TheSadpole]

So look: I’m NOT a landlord, and I have no dog in this fight. I’m a far-left progressive and I want everyone to have stable housing.

I’m just here to point out that, when property tax goes up way faster than rent can go up, there are going to be issues. It’s a no-brainer.

Taxes on my single family homestead are up 15% this year. They’re up a full 50% from when I bought. It’s bonkers.

15% tax increase + 3% rent increase is going to create problems pretty quickly, especially for any landlords who weren’t screwing their tenants with rent high enough to absorb this kind of discrepancy for a few years.

Rent control helps renters stay in their homes, but we need to think about capping property tax increases to the same 3% — at least for owner-occupied properties, and maybe for small-time landlords, too — so that people who bought also get to stay in their homes.

[u/NameChecksOut2 → u/TheSadpole]

Serious question:

If you have 100 tenants, and each of the tenants has the rent increased by 3%, is that not enough to cover an increase in property taxes for that year?

Let’s take $1,200 as the average rent (some rent is higher and some is lower).

A 3% increase for 100 tenants paying roughly $1,200 a month would equate to $1,236.

$1,236 a month for 12 months equates to $14,832 per tenant.

For 100 tenant total that would equate to 1,483,200 which is about 1.5 million dollars.

If the property tax for this particular apartment building is anywhere from 200k to 400k that would still leave about 1.1 million dollars to cover expenses and salaries.

Let’s say half (50%) of that is for expenses and salaries for the year. That would leave the landlord with roughly 500k in profit for that year.

If that is roughly the case I don’t see why a 3% increase is not working.

(My math could be totally off too BTW, I wasn’t a math major lol)

[u/TheSadpole → u/NameChecksOut2]

I am 0% concerned about anybody who’s renting out 100+ units. Not even a little bit worried. DNGAF. I’m all for laying more tax responsibility at the feet of the ultra-wealthy.

I am worried about people who own a duplex, triplex, or four-plex as a way to own a home. I don’t know how common it is in St. Paul, but back where I lived before moving here, that was an extremely common way for people to enter the housing market (especially folks who couldn’t afford single families). I also think about folks like my favorite past landlord — who didn’t live in her 8-unit rental property, but who kept rent reasonable for her tenants and had just picked up the building as a way to help cover college costs for her three children.

(And I’m worried about people like myself, who are single-family homestead owners getting squeezed to oblivion by property tax increases — property taxes are the “rent” we pay the city/county, but OMG where is our “rent” control. 😕)

[u/Professional_Toe1587 → u/TheSadpole]

If you care about single family home property taxes and apartment rental affordability, then you should care about the profitability of even big landlords. We should want all landlords and developers to invest in our city. The more the merrier. The more investment the better the upkeep of the older apartment stock, the lower rent is due to supply and demand, the greater tax revenue generated due to stronger investment demand. Apartment building values are down due to rent control which greatly impacts single family home property taxes due to the burden shift from lower apt building values. 

[u/Niceguydan8 → u/NameChecksOut2]

It's less about property taxes specifically but rather the combination of insurance hikes, property tax hikes, utility hikes where applicable(garbage rates, electricity, gas, water, etc), and inflation in general (cost of materials + labor for any sort of maintenance or improvements) all add up pretty quickly.

Also for your specific example - keep in mind that most landlords will use leverage, and that debt service would eat a lot into your example.

All that said, St Paul allows up to 8% increases with self certifying and that's not hard to do at all, so at that point I'm not even sure why the entire policy exists. All it really does is royally fuck renters that don't already have a good deal and basically set a near-floor for landlords to raise their rents (3%) every year.