I just sent this message to Governor Bob Ferguson, Senator Javier Valdez, Representative Gerry Pollet, and Representative Darya Farivar.
I am a property manager and real estate investor in Seattle. I want to be clear about who will be harmed the most by the proposed rent control legislation.
I recently purchased a property from someone who owned the building for 40 years and kept the rents extremely low for his tenants ($1,350 for a 2 bedroom unit in prime Leschi location, market rent $2,700). After I purchased the property I had to raise the rents to market in order to pay the new loan. The tenants who had been there for many years sadly had to move out because they could no longer afford the rent. Sounds terrible, right? Sounds like the exact people rent control is meant to protect, right?
What about the positives in this situation? This smaller property owner who kept his expenses low and paid off his mortgage early was able to keep the rents at 50% of market rates for his long time tenants that he cared so much about. Because we DON'T have rent control he was still able to sell his building for a premium. The tenants got to live in very affordable housing and the property owner was still able to sell for maximum profit. A win-win.
RENT CONTROL WILL ELIMINATE THIS PROPERTY OWNER. If those units were rent controlled I would have been willing to pay only 60% of the price for the building. The owner, acting in his own self-interest, would never have kept the rents that low in the first place. The tenants who were able to live for so long at such a great price would never have received that opportunity. I see this situation all the time where a person owns just one or two properties, has paid off debt, and purposefully keeps the rents low until she retires because she loves her tenants. These people will cease to exist if they know their property values will be dramatically reduced when the next buyer is unable to bring the rents to market!
The current law in Seattle actually strikes a reasonable balance. The new owner can raise the rents all the way to market but must pay the tenant 3 months of rent as a relocation fee if the tenant is under a certain percentage of area median income. The buyer of the property can price in the 3 months of relocation assistance and reduce the purchase price by the relocation assistance amount ($1,500 rent * 3 months = $4,500) instead of the hundreds of thousands of dollars of property devaluation that would have been inflicted to the property owner in my example.
I beg you to re-consider your rent control push. The endless onslaught of regulation in our business continues to create extreme frictions in the landlord tenant relationship. At 7% + CPI (approx. 10% total) you can guarantee that every property owner will raise rents annually to the rent control max. How does 10% annual rent increases benefit the residents of our city?
PLEASE VOTE NO on rent control! 🚫🚫🚫
