State Rent Control… Pretty Much A Done Deal… Just How Much.

Statewide Rent Control… a concept that terrifies landlords and some economists appears to be headed for adoption this year at the Oregon State Legislature, that with last year’s mid-term elections has moved even more Democratic with super majorities in both the Senate and the House. Rent Control long floated at various times in Oregon and Portland has always seemed a bit radical for even our deep blue state, but with housing prices and rents ratcheted upward the last 4-5 years has become more mainstream among our elected officials, even as many point out the these measures may have the opposite effect of decreasing housing supply and thus continuing the pressure of prices and rents.

The nature and scope of the bill being considered and gaining momentum though is a pretty tame swipe at rent control which has many on both sides thinking this may the “best we can get”. That is a relief to those who generally think rent control is a stupid idea, bordering on socialism and basically counterproductive to increasing housing inventory, who were thinking a year ago that efforts were going to produce very onerous restrictions.

House bill 608, which would limit rent increases and bar no-cause evictions after a tenant’s first year in a building, has powerful sponsorship from House Speaker Tina Kotek and Senate Majority Leader Ginny Burdick and on January 14th received the endorsement of Governor Brown. While multiple cities have rent control, Oregon would be the first state to enact state wide measures.

Though there may be some “tweaks” to the current bill as the lobbyists and sausage making of the legislature occurs, here are some of the basics:

It will limit rent increases to 7 percent plus inflation in a building more than 15 years old which with could put yearly increases allowed at a very healthy rate of around 10%. Statistics of average rents throughout Oregon show that rents have increase slower than this rather liberal cap except for some some small samples such as one bedroom units in Portland that have passed this 10% threshold.

It will prohibit no-cause evictions for tenants who have lived in a building for at least a year which would make it much more difficult for property owners to substantially upgrade and renovate properties or demolish older projects with the intention of creating more density.

Putting these two policies together is logically considered inseparable.

Initially many thought this policy was being formulated because of Portland’s more visible and publicity garnering affordability issues, but many cities like Bend, Salem, Eugene and Southern Oregon say they too are seeing some rather dire affordability issues too.

Landlords and Developers are generally saying “Whew” over the bill because of these liberal rental caps and much stronger restrictions being floated in previous legislative sessions. Plus with a more tenant friendly legislators coming being elected, the fight seemed to be stacked against them so this rent control “lite” seems to be a good compromise and one many economists think are loose enough still make new development of housing units pencil.

With all that said, there are still big concerns by tenant’s rights groups that these measure are not enough and a lost opportunity to really get impactful protections while landlords may think it is too much and fear once controls in place it will be the proverbial slippery slope that will make it easier for legislators to vote for further adjustments down the road to say 5% or less rent increases.