More Regulations During a Housing Shortage Is a Bad Idea

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One always has to wonder something after reading an article like the one Madeleine List wrote about legislation to force landlords to take government housing vouchers and to block their ability to find out if potential tenants have appeared in housing court before.  Was the reporter absolutely unable to find anybody to offer a contrary view?

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The first argument one hears as an opposing view is that tenants who aren’t paying their own rent might not feel as inclined to keep it up or stay on good terms with their landlords.  Although this might be a reasonable concern, in some cases, it may be more of a strawman, because it isn’t the best of the three most-obvious answers.

The most practical of the other two answers is that Section 8 isn’t simply a source of income.  Accepting Section 8 vouchers requires the landlord to accept regular government inspections and other impositions.  Even if we take as a given that the government will never make inspections more burdensome than the most basic health and safety concerns that all landlords should cover voluntarily, many may simply not want to deal with that extra layer of bureaucracy.

The third obvious answer is that accepting low-income tenants comes with some risk, whether the risk is that they won’t treat the property well, that they’re on the bordeline of being able to afford the rent at all, or that the government might decide that its vouchers give it more authority over your property than was initially the case.  And risk comes with a cost.

This gets to a point about unintended consequences that legislators really should keep in mind at all times.  Imposing risk effectively raises the cost of being a landlord, either by imposing an cost in stress or by forcing them to raise rates or lower profits in order to compensate when the risk goes bad.

Raise the cost of rentals, and we’ll have fewer.  Have fewer rentals, and the natural price of the market will go up.  Raise that price, and we’ll have fewer rentals.  Rinse.  Repeat.  Housing crisis.



  • Rhett Hardwick

    “The third obvious answer is that accepting low-income tenants comes with some risk, ”

    Yes, and one of the risks is their friends.

  • Justin Katz

    Fair enough on the description of the bill, but knowing that a person has won in housing court can be useful to a landlord. If a potential tenant has been in housing court a dozen times with different landlords, that’s a signal of the type of tenant applying.

    Again, the more risk — or even perceived risk from their point of view — you put on landlords, the more expensive of a proposition it becomes.

    • Rhody

      “If a potential tenant has been in housing court a dozen times with different landlords, that’s a signal of the type of tenant applying.”

      Yes, it does signal the type of tenant applying, the type that knows their rights, the type that stands up to unscrupulous landlords, the type with moral fiber. Sounds like a good tenant to me.

      • Christopher C. Reed

        …said no Lessor ever.

    • Pstrnk

      If a landlord is that concerned about renting to someone who knows their legal rights, that’s a pretty strong signal about the type of person the landlord is, too

      • Justin Katz

        Perhaps. But if he decides not to be a landlord, supply goes down and price goes up.

  • Rhett Hardwick

    “it expunges the record of someone who wins in housing court.”

    If you are not convicted on a criminal charge, the record is not expunged. If you “win” on a small claims claim, the record is not expunged. Seems like a little favoritism to me. I understand Massachusetts has a similar procedure. If you begin an eviction against a tenant who moves out prior to hearing, it is declared “moot”. As I understand the law, the landlord is entitled to an order for “possession”, or there is nothing to stop the tenant from moving right back in. A little housing court history. When it was invented in Massachusetts, they tried to stick Whitey Bulger’s brother in as the clerk. The judge refused, so his pay was cut, or similar. When the governor (Mike Dukakis) ran for president, the Judge quipped “If he can’t stand up to a corrupt midget, how can he stand up to the Russians?” The “corrupt midget” was Whitey’s other brother, the President of the Senate. The judge was forced to apologize, it isn’t just Rhode Island.

  • Christopher C. Reed

    Section 8 a/k/a “Housing Choice Vouchers”

    The counter-productive coercion of LL’s to take on S8 tenants seems to imply that s8 tenants are undesirable tenants. In several years of dealing with S8 and the housing authority I found on balance that the S8 program was worth the hassle. Like all economic decisions you have to make, the question is ‘compared to what?’

    Understand that every building has its market, and for your building, the S8 applicant may be the best ready, able, and willing tenant to rent to. Low-income tenants are axiomatically marginal; when they have a problem, you have a problem. Most S8 tenants know they have a good thing going and are organized enough to do their best to keep it that way, i.e. not get thrown off the program. They know that if they have problems with the LL and the LL documents his complaints to the agency, they will be hearing from their housing officer. By contrast, just try your luck evicting a tenant for reasons other than non-payment in housing court.

    The S8 inspections were for stuff you should have under control regardless. Lead paint, removed or encapsulated — you have to have a cert for that anyway. Leaks–fixed (water damage). Flickering light fixtures — rewired (extreme fire hazard). Broken windows–seriously? Somebody has to be told to fix busted windows? (Though some tenants can be unreasonably tough on windows…doors…walls.) In general the inspectors are not there to bust your chops, though sometimes they feel they have to find something, anything. One time an inspector was OJT’ing a new hire. In the basement he found some open slots in the CB panel. Oy! So I learned to leave an open slot in the panel, or some chipped paint somewhere, just as a consolation prize.

    As in any bureaucracy, the system runs on paperwork. And there’s the trip downtown to meet with the housing officer to negotiate the lease, sign the paperwork, etc. But you don’t bother to pull a credit report on an S8 app. I picked up some decent tenants from S8 LL’s who were willing to cash the gov’t check, but not repaint the peeling walls and trim.

    And that gov’t check arrives timely and always clears. This versus the ‘first week of the month income lottery’ with tenants ‘on the economy’. The agency has guidelines as to what it considers comparable rents. So they throw out their figure and you can take it, leave it, or counter it. (Socialists don’t grasp this ‘high bid wins’ concept.) We found we could always reach an acceptable figure for rents in Providence. Not so for Warwick. E.G.? Fuggedaboutit. But it makes no sense to invest in Providence rental housing due to the tax regime, so now we play our chips in South County…

    We always got fair dealing from the housing agency vs. the planning, zoning and fire bureaus. Must be a New England thing. In Florida, the housing agency is an auxiliary to the local pols. You pay to play.

    We found s8 tenants to have less turnover than higher-income tenants, who can qualify to purchase under the cheap money regime pushed by the Federal Reserve and allied agencies. So, yes, the United States of Goldman Sachs is depriving us of qualified customers because…clout. Low income tenants were less inclined to pester the landlord, although they did on occasion confuse us with law enforcement, (The Man being a more-or-less undifferentiated entity), calling us to complain about some tweaker climbing the fire escape, for example. Why don’t they call the po’lice? “They don’t like us.” Fact.

    We had high-income renters who went BK or were foreclosed on after the crash, who quickly repaired their credit, bought and moved out. Higher rents, higher turnover, higher entitlement…you pick your poison in the LL business.

    The whole notion of ‘forcing’ a property owner to take a gov’t check is so cockeyed it belongs in some Stalinist paradise like Venezuela. HUD uses some magic algorithm to determine fair market rental values. They were competitive in Providence, somewhat off in the inner suburbs, and way off out there where the quahogs roam. Don’t know why, probably something to do with funding the program. Sometimes some hapless individual would call on a $2,000 a month rental out here in Woodchuck, RI.
    “Do you take Section 8?”
    “Sure,” we answer, knowing where this is going. “How much is your voucher for?”
    “Uh, $1500.”
    “Hmm, I just don’t think that’s going to work for us, sorry.”
    Can’t fault ’em for putting in their bid, but..high bid wins. And they cannot pay the difference out of pocket even if they ‘could’ (with some help from their ‘cousin’), because they qualify for section 8 precisely because they can’t pay market rate…if you follow the logic. Woe betide the LL who thinks he can get a check from Uncle and a little extra under the table…big whups when that comes to light. But nobody is obliged to accept a financially weaker applicant in preference to a stronger one, or, pet-owners if your policy is ‘no pets’, for instance. And nobody has to rent your house. Let it sit vacant if you like–plenty of that in Prov now…

    There are (or were) some fairly well organized rental grifters out there, but you can usually spot the tells. Or you will learn fast. Once I pulled the most amazing credit report ever, the only one I’ve ever seen better than my own. Page after page of mortgages, taken out and paid off, lines of credit…amazing stuff. I thought, I should apprentice with this guy–he’s a playa. He did have his 5 minutes of local fame. Last I heard he was taking a career timeout in the ACI.

  • Joe Smith

    and at the same time we have a state legislator pushing to pay people to move into the state – of course only 6 figure households who can “afford” housing!

    Plenty of evidence on the impacts of onerous affordable unit deed restrictions or bloated regulatory costs for development that incentivizes high end over “affordable” units as well as promising programs such as easing rules on accessory dwelling units or using vouchers to build equity instead of rent, etc.

    Maybe we need a 21st century version of the Homestead Act, except now for urban properties.

    • Rhett Hardwick

      Many years ago (20?) HUD had a program where seniors could get loans to convert their homes to two units. Seemed like a good idea for lower cost housing development. I think that disappeared when HUD’s ability to deal with individuals disappeared. I thought of this some years ago, I was going to incorporate a rental unit in my barn. I called HUD, all they would tell me was “Hire a HUD consultant”. And this was just after 4-5 “retired” congressmen had been indicted for their actions as “HUD consultants”. Barbara Walter’s boyfriend, Sen. Ed Brooke is the only name I can recall,

  • ShannonEntropy
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