After two years of trying rent stabilization bill heads to Washington State Governor for signature. Bill in part limits mobile home park rent increases to 5% with additional tenant protections. All other rental units capped at 7% with a cap at 10% with CPI.
Sounds like every LL will need to raise rents every year by the max 7%-10% every year to every tenant to ensure they donāt fall behind. Even in year with 3%inflstion you increase at 7% to account for years when mkt moves & where home prices move > 7-10%. Seems like the legislature is trying to control part of the mkt (rents) without controlling the larger part which sales of existing homes and skyrocketing newly constructed homes.
Same in PA! Rent control bill is being pushed quickly through, aimed specifically at parks. 4% max annual increase.
āRent stabilizationā = Euphemism / double-speak for ārent controlā a prime driver of socialism/communism
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These are āFake Rent Controlā ordinances.
7% plus CPI with a 10% Cap. I also see that you get a 10% increase upon lease change over.
While any form of Rent Control is not good, this form is not horrible.
I ran the numbers on the park Iāve owned the longest.
The 25 year average rent increase came out to 4%.
The problem with these rent control bills is they only punish the folks that never raised their rents.
I would love to raise my rents 7-10% every year in perpetuity. Unfortunately for all the Renters in the state that will become the standard raise as any landlord who doesnāt raise to the maximum is a fool.
Hereās a REAL Rent control ordinance. Real Rent Contol.pdf (779.1 KB)
.75% of CPI.
Ā§ 152.07 RENT ADJUSTMENTS.
(A) Annual adjustment based on the CPI. On February 1 of each year, the rent may be increased to an amount equal to the rent in effect on January 31 of the prior year adjusted by 75% of the increase in the CPI. The increase in the CPI shall be equal to the percentage increase between the CPI last reported as of October 30 of the most recent year and the CPI last reported as of October 30 of the year prior to that year. However, the increase shall not exceed seven percent of existing rent. The increase shall be annually calculated by the rent administrator and posted by December 1 of each year. The amount of the increase shall be routed to the nearest one quarter of one percent. In the event that the CPI decreases, no increase or decrease shall be authorized pursuant to this section. It shall not be necessary for an owner to apply or submit an application for a CPI increase. Across-the-board rent increases allowed pursuant to this section may be accumulated and implemented by the owner at any future time but not in excess of 12 months after the date so permitted and subject to the maximum limitation on increases set forth in Ā§ 152.10.
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Spot on. One state we own in is an adjusted CPI+1% ācapā (can go higher for capex/other). Guess how much we raised the last 5 years? 7%, 8.5%, 6%, 5.5%ā¦. anyone doing any less is foolish! I donāt mind the ācoverā from the state personally
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I have been involved in this legislation here in Washington for last couple years. Last yearās attempt faltered as many felt it was too confusing when tied to tightly to CPI. This legislation is less confusing and after some late inning concurrence meetings the final version passed both houses. What is interesting is that there was no modification of the MHP limit of 5% with no sunset clause. As a MHP owner and residential landlord I participated in round tables, press conferences and provided House testimony in favor of this legislation.
Our industry has been beset with too many bad actors whose unmitigated greed has put us in the crosshairs of legislative oversight.
How can they justify controlling MHCs differently than other rentals? Isnāt that a form of discrimination? Isnāt rent control discrimination against LLs? What other businesses get blanket price controls?
The 5% cap without a CPI adjustment is not right. However, you do receive a 10% immediate rent increase for new move-ins, which is a great benefit. Iāve seen Rent Control ordinances that are so strict that many park owners choose not to raise the rents, as going through all the hoops to get it approved is not worth the effort. IE it costs $2500/year in attorneyās fees to get the increase approved, but you only net out an additional $1200 in gross annual rent.
I do not like any form of government control on the free market; itās socialist.
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While itās unfair, our system has implemented price controls throughout our economy.
Electric Utilities: Pacific Gas & Electric (PG&E)
Natural Gas Providers: Southern California Gas Company (SoCalGas)
Water Utilities: Most, if not all, water utilities are subject to some form of price regulation.
Telecommunications: AT&T
Cable TV: ā In some local areas, there are still price limits for basic cable.
Rent-Controlled Housing: CA OR NY and now WA
Pharmaceuticals:
Airline Tickets: Some routes are subject to price controls. Think of a small town in Alaska.
Health Insurance: ObamaCare has price limits
During an Emergency, Many areas have emergency pricing limits. For instance, you canāt charge a 1000% markup for toilet paper during COVID.
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This is not a free market and it is certainly not socialism. This is our US Constitution, Bill of Rights and State Constitutions exercising the legislative authority to protect and safeguard the rights and well being of our citizens.
When we provide quintessential affordable housing to our most vulnerable of citizens and then we raise rents exponentially and repeatedly, (only to line our pockets and appease investors) tell our managers to issue a minimum number of citations to our residents monthly, not pay our water bills and have the water shut off all the while knowing our tenants cannot afford to move thier trailers, cannot find anyone to buy their trailers and have nowhere else to goā¦ it is as Frank stated, āCustomers chained to a Waffle Hutā. And yesā¦ that comment came up in one of our roundtables (not by me).
This is not āwokeā media or stupid liberal politicians at work. It is our US Constitution protecting our citizens rights and well being. Our failure as an industry is our inability to temper the greed of those private equity groups and individuals who created this situation. And we all know who they are in our marketsā¦
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I agree with most of what you are saying.
If itās not a free market and itās not socialism, then what type of economic system is it? Traditional, Market, Command, or Mixed?
America is still a largely free country, and residents are free to live in our parks or to move elsewhere. Yes, there are some bad actors out there, but quite honestly, MH rents nationally are WAY too low.
Apples to Apples vs Apartments, we are way too low. How do I know? If a park were charging market rents, it would be able to operate forever. Parks keep getting closed down because there is a higher and better use for the property. When was the last time you saw an apartment complex torn down, versus the last time a mobile home park was closed?
You have to pick your poison here. Either raise the parkās rent to market rates to keep the park open, or allow it to close gradually. The latter puts additional upward pressure on the remaining units. It always boils down to supply vs demand.
I also disagree that the Government is trying to protect us by passing more laws. I could single-handedly solve the affordable housing crisis; I need the government to get out of my way. Do you know that in California, it costs upwards of $500,000 in permit processing to determine if the Zoning Board will approve your permits? Keep in mind that they can also decline the project. Why would I do that? Instead, we trade parks with other park owners, and ZERO new units come to market.
Rent control is just another misguided way for politicians to make themselves look and feel better about the terrible job they are doing.
The correct route is to approve more Mobile Home parks. If demand remains the same, increasing the supply will decrease prices. Econ 101.
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Most new parks are Texas and ???. SDguy you are right onāgovernment does not produce GPD just redistribution of tax-payers money plus some politicians have real sticky fingers and also too their area they represent. A very educated 4th generation Californian is Victor Davis Hanson with some very helpful understanding of our present situation. Victor is on u-tube and has a weekly discussion of the present world situation.
Ma and pa park owners are mostly gone just like most small businesses. Most new blood to the park business are people who never built a park and are looking at milking it and to them raising rents is very important sometimes more than just the importance of their residents.
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I do not have a degree in Economics but it seems we use words like Socialism, Communism, Marxism, Capitalism and all the other āismsā along with āsupply and demandā we should remember that in thier purest textbook formā¦ they work. It is when you inject greed and a quest for power into the āismā that they fall apart. But this isnāt about politics.
We should be growing tired of all the worn out tropes that are pervasive in our industry like 'they can move their trailer if they want, they can sell and move elsewhere, we should be comparable to apartments, if we donāt raise rents the parks will close and the circus will take over. None of these things are trueā¦ They are just the whims greedy people think when they try to sleep at night. Some parks are on valuable real estateā¦ but a vast majority are not.
Lastly we should stop bemoaining government and legislative authority. We can complain about the other āpartyā but that is why we have the power to vote. Governance and legislation is all around us and provides us the basic foundations and guardrails to be successful. This is what our Constitution and Bill of Rights provides us. All of us- even out tenants. If you think you can do better without your/our government there is some beautiful beach front property in Somalia. There is no government thereā¦ you can ship your BMW over and build a little beach house, maybe raise horses, open some mobile home parks. Let me know how it goesā¦
We are the greatest country in the world because of our citizens, our Constitution, our Bill of Rights and our legislative governance- not despite these things.
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It sounds like mhp investors who raised rents aggressively are rewarded when legislation passes with a higher baseline. Is this gulf in the starting point between these parks and locally owned parks that didnāt follow suit factored into the legislation?
In the legislation you have been involved in, has resident income been factored in?
Noā¦ there is no retroactive resetting of rents. The 5% annualized limit is effective Wednesday with Governor Fergusonās signature and is based on current rents for all MHPs in Washington. Best of my understandingā¦ been going through the actual passed bill this morning.
No. By definition MHPs are considered affordable housing which kept us at 5% annually with no sunset clause. Legislation also dealt with residential rentals which had a 7%/ 3% CPI adjustment to max 10% with a sunset clause. The real debate was on residental rentals. Due to the bad actors in our State there was not much sympathy or support for MHP owners in the State- hence the tighter restriction.
I know this will not get many colleagues on this site offering to buy me a beerā¦ but as a MHP owner I have been supporting this legislation for over two years. Just so you know I am not obfuscating on my position.
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What happens with new parks or new owners?