Jim Sykes is a landlord in Seattle with three units for rent. He’s typical of the thousands of local landlords who manage a small number of units. He doesn’t hire staff to track financials, nor does he rely on the rent he takes in as his family’s exclusive income. On top of his responsibilities to his tenants and his family, Sykes has a day job.
Now he’s wondering if the property game is worth it.
Sykes is a member of the Rental Housing Association of Washington (RHAWA), a trade organization that announced May 30 it was suing the city over recent legislation that caps the amount that landlords like him may charge tenants when they move in. The legislation also allows tenants to pay security deposits, non-refundable move-in fees and last month’s rent over the first six months of their stay in the unit, decreasing the upfront cost of moving into an apartment.
Landlords argue that this ordinance shifts an inordinate amount of financial risk onto small landlords, taking away their ability to protect their investments. They say it may be enough to push them and their comparatively affordable units out of the rental market at a time when the city is trying to find ways to protect its existing stock of affordable housing and add more units.
“I don’t know how long I’m going to hold onto my property,” Sykes said.
This legislation, and other recent tenant protections like it, arose because people are struggling to find and afford housing, said Xochitl Maykovich, an organizer with the Washington Community Action Network, an organization that worked with Councilmember Kshama Sawant’s office to champion the move-in fees legislation.
“Desperation creates action,” Maykovich said. “People don’t organize for the hell of it. They come together to fix a problem that they are dealing with and a problem that is impacting their life and they can’t get by.”
The ordinance regulating move-in fees does a few things. It caps the combined security deposit and non-refundable fees to no more than the first month’s rent. It also prohibits landlords from charging more than 25 percent of first month’s rent to cover damages caused by pets.
Joe DiDomenico, an investor in local rental properties, said that’s not enough to cover the potential damages to units, especially for the new, upscale construction popping up all over Seattle.
Opponents of the law said this was particularly difficult when paired with the “first in time” law, a contemporaneous law that prohibits landlords from choosing among qualified tenants, taking away a landlord’s ability to select a tenant they trust.
“There are bad apples with no intention of staying and don’t want to be responsible for damages,” DiDomenico said.
The tenant protection laws that have sprung up in recent years don’t represent a City Council out to take down small landlords, Maykovich said. Instead, it reflects the amount of need that’s out there in a city with skyrocketing rents and vast income disparities between highflying tech workers and the baristas who serve them.
The RHAWA isn’t so sure.
“The message from the City Council is clear: Small landlords are no longer welcome in the city of Seattle,” said Sean Flynn, president of the board for RHAWA, at a press conference May 30.
Attorneys representing the RHAWA argue that by limiting the amount of money that landlords can charge upfront and regulating when they may collect it, the city is breaking a 1981 law that prohibits “controls on rent” and “the amount of rent.”
The distinction hinges on what “rent” actually means. It encompasses more than what a renter pays each month for the use of the unit, said attorney Joshua Whited.
“Rent is not just what you pay,” he said. “It’s the rental agreement.”
The city of Seattle will not comment on the lawsuit until it has filed an answer, which will occur sometime on or before June 19, said Kimberly Mills, spokesperson for the City Attorney’s Office.
“We will vigorously defend this ordinance,” Mills said.
RHAWA and the landlords it represents need to take a long, hard look in the mirror, Maykovich said.
“The question they need to be asking themselves right now is do they want to be part of solving our housing crisis?” Maykovich said. “By filing this lawsuit, they signal that they don’t.”
*An earlier version of this story incorrectly attributed the last quote in this article to Kimberly Mills. We regret the error.
Ashley Archibald is a Staff Reporter covering local government, policy and equity. Have a story idea? She can be can reached at ashleya (at) realchangenews (dot) org. Twitter @AshleyA_RC
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