Editorial: Cap on rent can keep more people in their homes

By The Herald Editorial Board

Among the upsides of home-ownership — for those paying a mortgage — is that monthly mortgage costs are relatively stable; especially so if you were lucky enough to lock in a low rate before interests rates started their recent climb. What you pay each month — after escrow costs for property taxes and insurance — remains fairly constant year to year.

That’s not a perk enjoyed by most renters who have no assurances that their monthly rental rate won’t increase. Those who want to remain in their rental home or apartment either have to pay up when warned of an increase or start looking for something they can afford. That dilemma has been pushing more and more renters out of homes and often, out of the communities where their jobs and schools are close by.

One Lynnwood renter in his 70s, profiled last year in The Herald, was notified his monthly rent would increase $300 to $1,710 a month, a 21 percent increase for an apartment he had been renting since 2001. Social Security payments, in contrast, were adjusted for inflation last year with a 3.2 percent increase.

That’s not affordable, not when the federal government defines the word as not requiring more than 30 percent of household income.

Since last year, which Lt. Gov. Denny Heck dubbed “the year of housing,” the Legislature has focused considerable time on addressing issues of affordable housing, in particular the need to increase the stock of housing in the state to meet current need and expected population growth for the next 20 years. In that time, a state Department of Commerce report has estimated the state will need at least 1.1 million new homes built, with nearly 800,000 of those apartments and multi-plex housing and 310,000 single-family homes.

Among last year’s successes was legislation that restricted cities’ ability to bar duplexes and fourplexes in single-family residential zones, streamlined permitting and design review and allowed two accessory dwelling units — mother-in-law apartments — per lot.

As Part II of the affordability focus plays out in the state Legislature this session, one subject of debate has been efforts to establish rent stabilization, limiting how much of an increase the owner of housing — either a company or a private landlord — can charge a tenant. Of two bills in each chamber that sought to enact stabilization, one piece of legislation — House Bill 2114 — earlier this week passed the House and is now being considered in the Senate, scheduled for a public hearing Feb. 22 before its Ways and Means committee.

The bill’s passage, 54-43, didn’t come easy; four Democrats joined Republicans in opposition. And it may face an uphill slog in the Senate, where a similar proposal — Senate Bill 5961 — died in the Housing Committee.

HB 2114 would limit rent and fee increases to 7 percent during a 12-month period, and prohibit increases during the first 12 months of tenancy. As well, late fees would be limited to 1.5 percent of rent charged. Importantly, however, owners of rental homes and apartments would be free to charge market rates of new tenants, above the 7 percent cap.

Speaking prior to the legislative session’s start, Rep. Strom Peterson, D-Edmonds, who serves as chair of the Housing Committee, said the intention of the bill — which started out with a 5 percent cap — was to provide stability to renters in what they had to budget for rent each month.

“The whole ideas is as a homeowner I know what my mortgage payments are going to be for the next 30 years. So we think that renters should have at least some similar predictability,” he said.

While opponents of the bill have criticized the legislation as “rent control” — a practice barred in the state since 1981 — the provision allowing market rates to be charged for new tenants properly labels the bill as rent stabilization, applying only to current tenants.

A 2019 review of research by the Urban Institute found that rent control — as opposed to the more-focused policy of rent stabilization — had a mixed result in meeting goals of improving economic opportunity and reducing racial disparities among neighborhoods, however it was able to keep residents in their homes for longer terms.

“If rent control is judged on its ability to promote stability for people in rent-controlled units, evidence has generally found it to be successful.” the report said.

But the basic fears that rent control’s harms — that it could end up hurting renters in the long-run by further discouraging construction of new housing, limiting housing stock and leading some landlords to pull rentals from the market, thus, increasing housing scarcity and driving up rental costs even further — are still a potential unintended consequence of stabilization and do call for caution and scrutiny by lawmakers of their proposed solutions.

Yet, lawmakers should have confidence that much of what the Legislature accomplished last year — and what it is still considering this year, including bills for co-housing, lot splitting and allowing multi-story apartment buildings within a half-mile of light-rail stations and a quarter-mile of bus rapid transit stops — will counteract the potential impacts that stabilization might have on the stock of rental housing.

As well, the 7 percent cap that is proposed should be seen as a reasonable compromise that keeps rents within an affordable range for tenants while allowing landlords — especially smaller providers of housing — to keep properties in good maintenance and still make a living themselves.

What may have killed the Senate legislation, for example, was a proposed cap of 15 percent on rent increases, which would have done little to assure affordability for many tenants. Our Lynnwood renter, with a 15 percent cap, still would have faced a monthly rent increase of $210, compared to $98 more a month at 7 percent.

Lawmakers need to find a balance that doesn’t pull housing from the rental market while keeping more tenants in their current homes at costs that allow them to pay rent and have enough left over for food, clothing, utilities, medical expenses and more.

Rent stabilization isn’t the only solution, but it will keep more people in their homes while the private and public sector work on building the 1.1 million new homes we’ll need over the next two decades.