Should rental of houses be treated as a business?

[Streck]

Our city is considering classifying rental of more than two houses as a business.

Fees will be collected annually to pay for inspections upon move-outs.

Purpose is to combat deterioration that seems inherent in rental housing, and protection of renters who might not be aware of building code deficiencies. It would also assure health and safety for occupants such as appliances, gas, electrical, vermin entry, sanitation, and up-keep of stairs and railings among other things.

We are adopting the International Building Code and intend to apply those standards for single family homes (we have no apartments).

Is this being done anywhere else?

Comments?

[jmello]

Is this being done anywhere else?

http://www.cityofboston.gov/isd/housing/rental.asp

[luckless pedestrian]

I'd be tarred and feathered in the Village Green -

but good for you!

[Memphis]

How is it that a jurisdiction can discriminate between rental and owner occupant housing? If the city is going to start charging a fee and inspecting rental housing for building code violations, it should do the same for all housing, as there is no difference. In other words, housing is housing, no matter who owns it. What gives the city the right to pick on certain segment of the population? Are owner-occupants never deceived by unscrupulous sellers? Are there no building code violations in owner-occupant dwellings? Are you saying that you do not want to ensure the health, safety and welfare of owner occupants?

Laws and ordinances are already typically in place to assist tenants or ensure property maintenance. Tenants usually can legally withhold rent if critical repairs are not made, and municipalities through aggressive housing code enforcement efforts (grass, weeds, trash, litter, broken windows, etc.) can ensure that property is maintained with existing inspectors. All a code inspector has to do is see one violation, then they can usually go on the property and look for more and cite for compliance.

It seems to me all such an ordinance as you describe would do would be to charge a fee that would get passed on to the tenant, thus increasing rents. It would also just create another set of bureaucratic rules which would require the spending of tax dollars to enforce. There are other ways of attaining your goals without another set of rules.

[Senior Jefe]

Some college communities have rental inspection programs. These programs are sometimes started after a student is seriously hurt or killed in a rental unit that was not properly maintained. Once upon a time both Manhattan, Kansas and Boulder, Colorado had programs. I don't know if they still do. When I was living in Boulder going to school the city inspectors would come thru our rental unit every year or so.

Its not uncommon for some local governments to has a lower standard for owner-occupied homes. The home owner can act as a general contractor whereas the contractor that pulls a permit for someone else's property or for commercial or rental properties may have to be licensed. Its basically saying that you can put yourself and your family in danger but no one else.

[BKM]

How is it that a jurisdiction can discriminate between rental and owner occupant housing? If the city is going to start charging a fee and inspecting rental housing for building code violations, it should do the same for all housing, as there is no difference. In other words, housing is housing, no matter who owns it. What gives the city the right to pick on certain segment of the population? Are owner-occupants never deceived by unscrupulous sellers? Are there no building code violations in owner-occupant dwellings? Are you saying that you do not want to ensure the health, safety and welfare of owner occupants?

Laws and ordinances are already typically in place to assist tenants or ensure property maintenance. Tenants usually can legally withhold rent if critical repairs are not made, and municipalities through aggressive housing code enforcement efforts (grass, weeds, trash, litter, broken windows, etc.) can ensure that property is maintained with existing inspectors. All a code inspector has to do is see one violation, then they can usually go on the property and look for more and cite for compliance.

It seems to me all such an ordinance as you describe would do would be to charge a fee that would get passed on to the tenant, thus increasing rents. It would also just create another set of bureaucratic rules which would require the spending of tax dollars to enforce. There are other ways of attaining your goals without another set of rules.

The City of Davis actually requires an inspection upon sale of a house-and that the house be brought up to all codes and illegal structures/improvements removed.

[mendelman]

Such a program/policy is not unreasonable. It is putting the burden on the properties' owner(s) to meet certain standards. Since, the rental of certain numbers of the units (usually such policies are for owner's with more than a certain number of rental properties - like 3 or more, etc.), the rental units are an essential portion of the profit production for a business.

Granted this would potentially increase municipal staff requirements and potentially costs (though the costs could be pushed onto the property owner).

These types of policies are definately necessary in college/university towns because student rental areas can easily devolve in the 'ghetto' conditions. Trust me, the student ghetto in Ann Arbor, MI was borderline, and many of the rental properties were borderline.

[Gedunker]

Regulating housing safety and habitability is a legitimate function of the government. Declaring that there is a business use because there is a monthly cash transaction taking place between the tenant and the landlord is fallacy. How exactly is that different than my paying a monthly mortgage?

[IlliniPlanner]

How is it that a jurisdiction can discriminate between rental and owner occupant housing? If the city is going to start charging a fee and inspecting rental housing for building code violations, it should do the same for all housing, as there is no difference. In other words, housing is housing, no matter who owns it. What gives the city the right to pick on certain segment of the population? Are owner-occupants never deceived by unscrupulous sellers? Are there no building code violations in owner-occupant dwellings? Are you saying that you do not want to ensure the health, safety and welfare of owner occupants?

Laws and ordinances are already typically in place to assist tenants or ensure property maintenance. Tenants usually can legally withhold rent if critical repairs are not made, and municipalities through aggressive housing code enforcement efforts (grass, weeds, trash, litter, broken windows, etc.) can ensure that property is maintained with existing inspectors. All a code inspector has to do is see one violation, then they can usually go on the property and look for more and cite for compliance.

It seems to me all such an ordinance as you describe would do would be to charge a fee that would get passed on to the tenant, thus increasing rents. It would also just create another set of bureaucratic rules which would require the spending of tax dollars to enforce. There are other ways of attaining your goals without another set of rules.

I think the term is called "slumlord." Many try to get around just about every ordinance or code there is to get every dime out of every tenant that would be living in the unit, leading to overcrowding and life-threatening situations. The slumlord may live in a different community or different state, not really caring about what is happening at his rental property(ies). Or strictly relying on a property manager, which could be a company, that has other "clients" as well.

With owner-occupied housing, it's a lot easier for neighbors to spot potential problems or to report what the problem is, in comparison to multiple units which exist in one building and neighbors may not be able to pin-point from which unit that problem exists. With owner-occupied housing, you're dealing with less transiency (for the most part), and people who care about what is happening in the neighborhood (again, for the most part).

If the two- or three-flat has a unit occupied by the owner, they are typically exempted by the license.

How exactly is that different than my paying a monthly mortgage?

If you don't pay your "rent" (mortgage), your "landlord" (bank) kicks you to the curb. And if your bank had no mortgages to give, they would probably go out of business. Or get rid of their mortgage loan officers.

[MennoJoshua]

The IRS certainly considers renting out a house a business. I see no reason why your city should do any differently.

My in-laws' neighbourhood (Greentown, OH) is in a township with no rental regulations. Some properties are continually rented out to marginal renters and are in a state of disrepair. It's hard for a property owner to accept but sometimes it's just not possible for them to rent at a profit without restoring to being a slumlord. I see no reason why the government should permit slumlordery just because of poor financial decision on the part of the property owner.

[mike gurnee]

Many communities have separate regulations on rental units. Check for examples in your state, and look for any state court cases. I would advise adoption of a property maintenance code rather than rely on a building code--or look at ICCs Existing Building Code. The requirements meant for new construction could be way too severe.

We went with city-wide property maintenance enforcement rather than hit only rentals, for many of the reasons already stated.

[Streck]

Thanks for all the comments.

Jmello, your link to Boston was very helpful.

I am surprised that the application form used by Boston does not require a signature of the owner or agent to certify info provided.

The Boston info will be very helpful in creating our own ordinance and forms.

[chasqui]

Streck,
A lot of cities have done exactly what you are proposing. Personally i think it is a great idea: single-family residential rentals can become a problem. The generic name is rental registration programs. If you do and interner search with "rental registration form" you will find a lot of samples.

I have found that typically the programs keep good track of rental units and rentals are inspected (paid for from program fees). In one city I dod consulting work in they had a rental registration but: (and these are gothca's to consider)

1) the fees did not cover the cost of inspection - make sure you charge enough
2) they only had a one-time fee at the time of registry - make sure you can subsequent inspections down the line by either an annual fee or a fee when tennants change
3) Their list was nowhere near complete - make sure you enforce the ordinance and have a stiff fee for non-compliance.

Just my observations.

[Streck]

We are getting more and more houses being rented out by individuals.

Should cities be regulating this as a business?

Most rental property tends to deteriorate quicker than owner-occupied homes, because the renter does not have the same incentive to take care of landscaping and appearances which effect property values in the area.

Once it is classified as a business, in order to get a business permit, the city might be able to have some say in what standards the business must maintain.

This could be more influential than home-owner associations where there are any.

Two threads about the exact same subject created by the same user have been merged. And all placed in the Land Use and Zoning forum. mendelman

[Plan 9]

I would say only the office part of it. i.e. if they are collecting the rent, etc, at their personal residence, many cities would require a home occupation permit (or something similar) for that residence, but not the individual rented homes.

[Jess]

YES.....

....Unless it's not stipulated in the Building Guidelines or Deed of Restrictions...

..And subject to Rental Act.

..In the absence of a Deed of restrictions or HOA guidelines, Local ordinance shall take place, for security and control of the community like type of occupancy, which generates noise, traffic, waste disposal and so forth...

The reason for renting shall be scrutinized especially transients who just stay for days or for a week....

[Cardinal]

No. We zone based on use, not on user. If the concerns about maintenance are valid, then enforce maintenance codes or require an occupancy permit.

[mendelman]

EDIT: What I said up-thread. Though, I am beginning to lean toward Cardinal's viewpoint, but it really depends on the context. Towns with large off-campus student populations - sure.