Ann and Mario Figueroa are a landlord’s worst nightmare. Nine times, they’ve moved into rental properties, signed a lease … and then stayed for months without paying rent. Each owner has been forced to go through hell and back to get them evicted, including Karen and Skip Morairty, who spent six months and $15,000 to finally evict the couple.
And you thought Cousin Eddie parking on your lawn and tinkering with your septic system was a nightmare. At least he was planning to leave after a month.
The Figueroas and others like them stay indefinitely. And now the federal government wants to make that the national norm with a so-called “Blueprint for a Renters Bill of Rights.” And while the Blueprint aims at the laudable goal of reducing discriminatory and unfair practices against renters, its recommendations will likely increase discrimination, exacerbate renter and landlord costs, and reduce the presence of small landlords in close-knit communities in favor of corporate owners.
Markets operate best when the government acts as a neutral judge of laws designed for equal opportunity. Landlords and tenants can engage in robust competition, where both sides have negotiation power. The Blueprint, however, treats entrepreneurial landlords as the de facto problem, handing over much of their power to tenants. And instead of diversified options, poor and minority renters will find themselves having a more difficult time than ever.
For example, the Blueprint discourages a number of practices that it claims are racially discriminatory, such as the use of AI algorithms to vet potential tenants. But the Federal Reserve of Minneapolis found that discrimination against black male applicants increased after the city placed racial blindfolds on tenant screening. Additionally, blanket bans on considering renters’ personal backgrounds and income sources mean that property owners cannot use their best judgment after careful consideration of each individual applicant. Instead, landlords — who have the same right to receive payment for goods and service as anyone else — will likely simply cut off access for whole swaths of society.
Another problem is the endorsement of rent control. The Blueprint says “renters should pay no more than 30 percent of household income on housing costs.” But New York City tried this in the middle of the 20th century — and when stagflation hit in the 1970s, the chickens came home to roost. Prices rose, but property owners couldn’t afford to maintain their buildings. They simply abandoned them by the tens of thousands each year, leaving tenants homeless and allowing buildings to become gang and drug dens in one of the most dangerous cities in the country.
With our rental shortage getting worse — and very low-income people struggling the most to find a rental — do we want to replicate New York’s mistake on a national scale?
A final risk of the Bill of Rights is that it will likely exacerbate, not solve, the White House’s concerns about corporate players forcing mom-and-pop owners out of the business. These small players make up 70 percent of small rental properties, but they cannot afford the deluge of paperwork and red ink that comes with a nightmare tenant. Increasing their costs and risk is a double door opportunity for the big players to buy up whole neighborhoods that used to be made up of families invested in the community.
Karen and Skip Morairty have thrown in the towel. After they finally ousted the infamous Figueroas, the Morairtys were left tens of thousands in the hole from unpaid rent, property damage, and legal fees. So instead of moving back to the charming Spanish-style home where they held their wedding reception and started their family, they have no choice but to sell it and recoup their losses.
Their story will become commonplace if lopsided, anti-landlord policies carry the day. Homeowners, tenants, and communities will all be worse off for it.
Mike Feuz is an economic consultant by day and a research associate for the think tank Free the People by night. He has a Master’s Degree in economics from George Mason University, and his work has been published by Real Clear Policy, The Washington Examiner, and Inside Sources.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller.