City Penalizes Landlords Who Raise Rent

by Chris on February 13, 2017

Portland, Oregon has passed a controversial new ordinance that requires landlords there to pay up to $4,500 to tenants who choose to move because the landlord is raising the rent.

City Council passed the new measure unanimously. The law is seen as Plan B, after the same lawmakers failed to muster the votes for a rent freeze. The state of Oregon at present has a ban on rent control ordinances.

The law applies when a landlord:

Chooses not to renew a fixed-term lease;
Wants to raise the rent 10% or more over a 12-month period; or
Terminates the lease without legal cause, such as taking the property out of service.

Under the ordinance, the relocation fee for a studio is $2,900, a one-bedroom $3,300, two-bedroom $4,200, and $4,500 for three or more bedrooms.

In some cases, the relocation payment must be made 45 days prior to the tenant’s exit. Lawmakers say the relocation fees are based on the typical first month’s rent and security deposit that a tenant likely must pay to secure an alternative rental home.

Exceptions include rooms in owner-occupied homes, landlords who rent only one home, and landlords who rent out their residences for no longer than three years.

Landlords who fail to comply with the ordinance may be required to pay three times the payment plus three months’ rent, attorney fees and costs.

The measure already is in effect, and applies to many pending evictions where a 90-day notice currently is in progress. Lawmakers have stressed, however, that the measure is temporary. It expires in October unless Council renews it.

Not surprisingly, the measure was met with resistance from the landlord community, and so far two landlords have filed a lawsuit challenging its constitutionality. A major landlord association is arguing that the new rules violate the state’s rent control ban. Objections from private landlords center around the fact that they themselves are local residents and should not be required to forfeit their income simply because the rental market is tight.

Meanwhile, state lawmakers heard from tenant groups who want to expand the Portland ordinance throughout the state, or repeal the present ban on rent control. It is not known at this time whether any action will be taken at the state level.

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Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

{ 1 comment… read it below or add one }

Bill - The Educated Landlord February 14, 2017 at 10:46 am

Any short term benefit from rules like this always get negated by the long term problems it creates.
Without fully knowing the Portland situation and reading through the lines it appears there is a housing shortage causing rents to increase as demand increases. This is typical of a free market and usually follows with indignation from tenants who get hit with the increases.
The short sighted approach has often been rent controls due to the loud noises from all the tenants groups and the great optics it makes for politicians. The long term results of this usually end up pushing new investment of rental stock out of the area, decreasing quality of the current stock and in almost every case reducing the overall amount of rental units creating even more shortages, poorer overall quality of the rental stock as it gets outdated and has less money to be put into repairs.
This set of rules is attempting to bypass the ban on rent control, but it will likely have the same result as more and more landlords simply give up on a business that doesn’t provide a return. Unlike government running a landlord business is a for profit operation and if those profits disappear through measures like this, so do the landlord businesses>
The Educated Landlord

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