The state House of Representatives on Tuesday passed a measure that limits how much landlords can raise rents each year. When Gov. Kate Brown signs the bill (a sure thing), Oregon will become the first state in the nation with statewide rent control.
Senate Bill 608 was a done deal from the moment it passed the Senate a few weeks ago, especially when you consider that the Senate is where another rent control proposal died two years ago. (In fact, passage in the House was such a sure thing that the first press release from Democrats touting the vote reported that the measure passed on "a XX-XX margin," a sure sign that the press release was written beforehand but was issued before someone had a chance to insert the actual vote totals. Anyone who's worked with daily deadlines knows how easily that can happen. If you must know, the actual vote was 35-25. It wasn't a straight party-line vote in that three House Democrats voted against the measure, but not one Republican — in either chamber — voted for it.)
The bill limits annual rent increases to 7 percent plus inflation (currently running at about 3 percent a year). Housing complexes that are less than 15 years old would be exempt from the cap. When a tenant voluntarily leaves, landlords would be able to reset rents to market levels, regardless of the cap.
Landlords who own four or fewer residential units would not be required to pay tenants one month's rent for relocation expenses when evicting them under the new-landlord clause.
Those relatively generous allowances for rent increases were a big reason why the state's largest landlord organizations didn't oppose the measure, although it must be said that they were not enthusiastic supporters: "I do not believe it will be catastrophic to our livelihood," said the legislative director of the Oregon Rental Housing Association.
The bill also limits the circumstances in which tenants can be evicted without cause. The idea is to give renters some semblance of predictability and to protect them against price gouging, and there's merit to those goals.
The big argument against rent control is this: Plenty of academic research suggests that strict rent control reduces the supply of rentals in the long run. The reason why is that landlords, their hands tied in terms of raising rent, increasingly are unable to earn enough money from rent. The end result, potentially, is a tighter rental market — exactly the opposite of what Oregon needs.
Speaker of the House Tina Kotek and other supporters of Senate Bill 608 argue that the rent control system envisioned by the bill won't compel landlords to pull their units from the market, because of the annual rent increases it allows. (Similarly, they argue, exempting new construction for 15 years will allow developers time to generate a good return on their investment.)
But will that be the way the bill plays out in the real world? That's the big question — and no one knows the answer, because Oregon is on its own in terms of statewide rent control. You can bet that other states grappling with housing crises (which is to say, almost all of them) will be keeping a close eye on how this plays out here.
Oregon officials need to be keeping careful tabs on this as well: If it turns out that the state's experiment in rent control backfires, they need to have the courage to revisit this matter and pull the plug if need be.
Even if rent control plays out exactly as its supporters intend, it only offers protection to current tenants. It does nothing to solve Oregon's affordable housing crisis, which will only be solved when we figure out how to create more, well, affordable housing.
In a lot of ways, then, this rent control bill is the easy part of the equation — as odd as that sounds to say about a proposal that's required years of effort. There's plenty of work ahead on the tougher question: How do we clear the way so that Oregon residents can afford safe places to live? (mm)