Your Next Landlord May Be Required to Offer You a Payment Plan for Deposits and Other Move-In Fees

Comments

1
And how will they cover this added expense to their business? You guessed it, higher rents!
2
Payment plan, aka higher rent
3
Heidi, do you have facts on how many renters skip out on their lease?( If they have one)
Did anyone --pro or con -- offer any facts on current losses due to tenants who won't pat, won't move etc etc?
Rational fact-based discussion about current losses should be in record somewhere.
4
@1&@2
All rational landlords will compensate for what will be higher losses by raising rents.
If during rent control would be a recognized cost to add to rent.
5
Anyone ever rent a house or apartment from a landlord that has only a couple units isn't particularly on top of maintenance, but has their own 9-5, is available by phone and doesn't regularly push exorbitant rent hikes? Maybe they've all cashed out to developers and professional rental managers by now. If not, This should help push them out.
6
Of course this will result in even higher rents. There is simply no other possibility in a market economy.
7
The one-month deposit and 10% non-refundable fee caps totally make sense, but 6-months to pay off move-in costs will likely make landlords very nervous—though it's rare a tenant will abandon or damage a unit in the first 6 months, the owner is now without a safety net during that period—and insist on higher initial rents to cover their bases sooner.
8
@7 As a landlord myself, you can guarantee I'll be adding this to my costs and passing it on to my tenants. I already itemize my rent so they know how much of their rent goes to taxes and overhead from city regulations. Informed consumers vote smarter.
9
I wonder if landlords will offer discounts to tenants who can pay everything in full when signing the lease. I can see that happening
10
@9 Good idea.
11
As a landlord I fully support this. I see no reason to raise my rents once this is in effect because I already charge zero non-refundable fees. There is no need. If the place needs to be cleaned due to the former tenant leaving a mess, it comes out of their deposit. All these places charging a $300 "admin" or "move in" fee are just ripping off desperate renters.
12
@11:

I keep wondering about that. The tenant moving in is already paying first/last rent, plus damage deposit, plus fees for credit checks, as presumably did the renter before them. So, what exactly does that additional move-in fee cover? Also, why doesn't the renter get all the interest accrued from that last month's rent that, again presumably, the landlord has stuck in a savings account for the duration of their tenancy? After all, THEY could have been earning interest on that money, were it not for the landlord insisting on holding it.
13
I'd expect the outcome of increased applicant/tenant protections to be increased applicant scrutiny.

No small landlord has enough experience or data with early defaults to properly measure and price the risk. Even if they could find an appropriate price for the risk, they can't actually price it so... The downside is far too great. (Look at efforts to properly price flood insurance for coastal properties.) So they will model for the worst possible case as if it were guaranteed to happen, but that'd result in overpricing and rents that can't compete. Better instead that they find "cheaper" ways to raise the rent: require higher credit scores, additional account statement histories, etc.

There are some cities where tenant protections are so strong that the typical rental application requires a few months of bank statements, two years of taxes, great credit, government issued photo ID, employment letter, gross income 35, 40, or even 50x the monthly rent, landlord reference letters, etc.* Anyone that can't meet those requirements in those markets is usually stuck in the Craigslist "rooms for rent" submarket.

*Consider too Seattle's new (as of Jan 1) requirement that the first qualified applicant be granted a lease. If a landlord piles on a half dozen or more application requirements such that essentially no applicant is ever really fully qualified without some waiver... How does that first-come-first-served policy get enforced?
14
@12 It's just rent by any other name necessary. It helps with marketing; you want to show the lowest rent possible:

Scenario 1: Your 1br asking rents are at $1999 and you need to raise them $25. You could risk losing everyone searching for $2000 or less. Or you could keep advertising at $1999 and tack on a $300 fee.

Scenario 2: A comparable building down the block is advertising at $1800. Your 1brs asking $2000 are getting ignored. Drop the rent to $1900 and tack on extra fees (application fees, parking fees, amenity fees, etc).
15
@12 I forgot to note: Money is fungible. If you're paying it to the landlord in the course of tenancy and you're not getting it back after the tenancy, it really only has one proper name: rent.
16
@11- I completely agree on the non-refundable fees. There's little or no excuse for most of these. But the law also allows up to a 6 month delay in paying the damage deposit. Your statement that "[i]f the place needs to be cleaned due to the former tenant leaving a mess, it comes out of their deposit" assumes that they have actually PAID a deposit. That is the point of getting the deposit up front. Same with last month's rent - if someone stops paying rent, the last month's rent that you have not yet been able to collect is of no use. Contracts are all about allocating risk. The city's new laws are placing all of the risk on landlords and none on the tenants. That is going to prove counter-productive in the end, as @13 said.
17
Too little, too late. As was semi-professional who has lived in Seattle 20+ years, on both Queen Anne and Capitol Hill, this town have become a grossly over-priced, hipster-infested, cookie-cutter shithole without the wages to back it up. Its a San Francisco wannabe without flare or relative wages to be sustainable. The average studio is now almost $2,000 in a 100+ year old building with a multitude of post-Nisqually earthquake problems that should have been addressed by landlords 15 years ago and haven't. Right now, as I write this, my heat is on high and I can feel the cold air coming through the "double pane" windows with cardboard boxes in front of them, trying to block some of the air, leaving my apartment, an outdoorsy-christmasy, 50 degrees inside, and a $15.00 an hour full-time job (for most working class) and a payment plan are going to fix everything? Get real! There are a lot of people that are smoking way too much dope out there running the show that dont have clue one. This town is fucked and landlords will regret the day when people wise up and realize, like I, have that this state aint worth it anymore and life is too fucking short to live like this. I cant wait for the next entitled hipster techie to move into this apartment and sue the landlord for repairs that should have been done years ago. Lord knows they have the income to do it! Too fucking bad too, but when you have a town built on fast development and greed, you arent going to be around for very long, I dont care what employer happens to be in this town. Have fun you greedy MoFos trying to find a working class to pull your coffee, get you to the hospital after your stroke or bring your plated Tom Douglas meal to ya! See ya in the funny papers!
18
"Have fun you greedy MoFos trying to find a working class to pull your coffee"

There's no shortage of English lit and women's studies majors in Seattle. We'll be fine.
19
@18 Most of those folks hold a business degree, jackass.
20
As a landlord, I generally agree that non-refundable move-in fees are just a way to extract money, and I almost never use them. However, the way the law is written currently, a tenant can (and they regularly do! even the otherwise best renters!) break a 12-month lease after 2, 4, 6 months for any reason, and there is no form of compensation for the landlord's having to get in a new tenant. You could point out that, yes, there is the protection to the landlord that if the landlord puts in true effort to rent out the apt and can't, then the tenant is on the hook for continuing to make payments. Sure. But that's separate; my point is that there is no compensation for the most difficult part of being a (single unit or just a few units) landlord: going through the process of showing the unit, screening applicants, and getting a new tenant moved in. What makes sense to me is a move-in fee that is returned to the tenant at completion of the (presumably 12-month) lease (but not returned with a broken lease). That way if you suddenly have 20 hours of extra work dumped on your plate as a landlord when a tenant moves out after 3 months, you don't need to spread that cost to the tenants who actually stay the length of their lease.
21
Another unnecessary intrusion into private property rights which will result in the exact opposite of what they hope to achieve.

If passed, the result will be higher rents to offset the added artificial and external risk imposed on landlords ... and fewer and fewer will be interested in playing this type of game.

The net result, fewer and necessarily more costly rental units.

This combined with the rise in the minimum wage, will continue to drive out the poorest, least skilled and weakest elements of the population and reduce employment opportunities for same in the city.

The expansion of the homeless encampments was a good idea. I think we'll need them.

22
@21 Hahahahahaa what the fuck is this shit? "unnecessary intrusion into private property rights", are you fucking kidding me?
23
A payment plan is what you do for yourself before you spend money. It's called saving some money BEFORE you need it. It's the best payment plan in the world.
24
@ 21....I highly doubt anybody would have intimate relations with you, let alone rent to you.

Perhaps you have never owned residential rental property and simply speak from ignorance. It is so very easy to be generous with other people's money and property.

Imagine if you have saved enough to make a down payment on a rental property, made repairs, improved it over time and have rented it to create a nest egg for the future. The presumption being you can work hard, save your money, invest and get ahead.

Now comes the Seattle City and says:

"rent control -- here's what you can rent it for
"mandate who you can rent to"
"you have to slowly collect your deposits and security over time relieving you of any security"

All these little gifts are handed to you after you have invested as a jolly Christmas package with a slap on the cheek.

It seems as if the city "leaders" have forgotten all the people who work here, pay taxes and own property. It is as if we don't exist and this city has become a play ground for millennials who have no skin in the game.

25
@14:

So, basically it's what @11 said: additional mark-ups to rent disguised as some nonsensical "administration fees" intended to inflate the cost to the consumer without forcing the landlord to remain competitive based on the market. And some landlords wonder why tenants eye them with suspicion; they can smell a shit sandwich no matter how large the slices of bread.

As for the fungibility of money, well that works in both directions: the tenant is unfairly subsidizing the landlord by paying additional rent months, sometimes even years, in advance, because by the time the "last month" provision is invoked that money has a different value than it did at the time it was tendered. If the landlord is smart they have either invested that additional amount in some fashion or at least put it into a savings account where it accrues interest, but conversely the tenant has lost that additional value by not having the Capital available to invest or save themselves.
26
@24:

I've never had a landlord who didn't pass on proportional per-unit property taxes, along with the long-term costs of mortgage and interest, maintenance, repairs, and upkeep to their tenants; they're not paying for those things, renters are.

Some landlords apparently are under the mistaken impression their tenants are as dense as rocks and have absolutely no notion of how costs are passed forward in order to minimize risk and maximize profit. If landlords are as hard-pressed to make ends meet as you claim, if investing in rental real estate is so rife with unscrupulous tenants and such as losing proposition without all that "hard work", then why in the world would any sane person get into the business of rental properties in the first place? But, you already know the answer: because there's money to be made in rental ownership, good money, relatively easy money, if you're a smart landlord.

If you're a smart and GOOD landlord you cover your operating, capitalization, and contingency costs by setting your price-point accordingly, and when things break or tenants leave you in the lurch you're prepared. But, by the same token you are far more likely to be rewarded with good renters who don't cause problems, who don't go out of their way to break shit (and yes, sometimes shit just breaks of its own accord), and who provide you with a steady, long-term, and relatively risk-free revenue stream. OTOH, a shitty landlord who cuts corners and jacks up rent but never makes even a minimal effort at basic upkeep (and we all know they're out there), is going to attract equally shitty tenants; you reap what you sow.

Leveling the playing field, as this ordinance does, only puts the landlord at a "disadvantage" in that they can no longer bilk tenants unfairly; sure, collect a cleaning deposit or some security assurance in the event the tenant breaks a lease early (assuming they can even get one, that is), or leaves the place a shambles. But, at least some of what renters are currently charged is simply extra money to line the landlord's pocket without requiring anything from them - literally nothing - in exchange. There's a word that describes such a situation - I'll leave it to you-all to figure out what it is.
27
@26, there are different types of rental properties. Many of them are single family or condos with a sole owner. Others are large rental properties with many apps and owned by a corporation or investors. It's a mistake to make an individual pay consequences of corporations and investors.
We do have a right to own property. And we do have a right to collect money in exchange for the use by others. But these changes will hurt individual property owners whereas the large entities will simply pass the costs along. Why does the city have the right to do that?
28
@27:

Why does the City have the right to do anything? Because we, as citizens of that City have collectively agreed that it has the legal authority, through our duly-elected representatives, to take actions on behalf of citizens, and for their collective benefit. For example: the City has the legal authority to do all sorts of things that "infringe" on the rights of property owners, regardless of whether they are individuals or corporations: the City can assess and collect property taxes that are used to fund City operations and to maintain or improve infrastructure; it can condemn unsafe or inadequately maintained property; it can zone parcels of land to conform with certain building codes which in turn determines what sort of uses can be made of the properties within those zones; it can establish and enforce environmental standards; it can place restrictions on use, as for example, noise regulations, or not upbuilding on certain properties where doing so might infringe on view rights of surrounding properties; it can even legally expropriate private property for public use under the rights of Eminent Domain.

Simply put: there is nothing in constitutional, case, or common law that grants owners of real property unfettered, unrestricted rights to use their property in any manner they see fit; and in fact, such unrestricted use would result in complete chaos. As with all rights there are limits to and responsibilities exacted from the free exercise of those rights; this ordinance is simply codifying some of the limits and responsibilities associated with the right to own private property used for the purpose of providing habitation to non-owners.
29
@ 27 We are only trying to bring to your attention the inequities visited upon owners of real property by this proposed legislation.

As you inadvertently indicated in your rather lengthy expose....the true costs will eventually be visited upon the tenants....one way or another in the form of increased costs being passed on in the form of higher rents, additional charges for amenities...parking, storage etc.

Just like menu prices in Seattle after the $15 Now....the prices will rise. Or as we are now seeing, many places (big places) will simply fold, never re-open or do what Tom Douglas is doing....move out of Seattle and open new places.:

Ponti,
McCormick & Smicks
Spaghetti Factory
Anthony's
Queen City Grill
Branzino..................and the list keeps growing

Please tell me what we shall do for all these unemployed restaurant workers in your Utopian paradise. You seem to have all the answers....I'm just wondering what your solution for this problem might be. (More homeless camps perhaps?)

This "socialized legislation" of outcomes doesn't work.

Sadly, the city council appears to never learn.

30
@29:

If you're attempting to assert these establishments have closed as a direct result of the $15 per hour Minimum Wage going into effect, you did a really lousy job of cherry-picking, to-wit:

Ponti's closed because, after 25 years the owners wanted to retire;

McCormick & Schmicks (sic) closed several locations nation-wide as part of a 2011 buy-out by a Houston-based restaurant conglomerate; almost all of the closures were in cities that don't currently have a $15 MW ordinance, and there are still several locations within Seattle in operation;

The site of the Spaghetti Factory is slated for redevelopment;

The demise of Anthony's was more the result of the changing demographic character of the City (read: fewer old people), along with the overall demise of cloned-chains and the commensurate rise of chef-driven restaurant groups;

Queen City Grill was evicted by their landlord, Plymouth Housing Group, for a long-history of financial difficulties going back to 2010, or roughly five years BEFORE $15 NOW was enacted;

Nobody (except the owners) really knows why Branzino closed. The hand-written sign that was tacked up on their door indicated it was due to "maintenance issues" and was only supposed to have been temporary.

In other words, of the restaurant closures you've cited, not a single one can be attributed to the increase in the Minimum Wage - NOT. A. SINGLE. ONE.

ZOMG! Tom Douglas, world-renowned chef and restaurateur, is opening new places outside of Seattle! Quelle horreur! Why things must be going just awfully for him in his hometown if he is being forced to EXPAND HIS EMPIRE! Clearly $15 MW has devastated his business!

And those poor, poor workers - wherever will they find employment, given the fact that new restaurants are only opening around here at the rate of about a dozen a week? Why, the business environment here post $15MW is simply TERRIBLE!

Seriously, want to give this another shot - or maybe just save yourself the time and effort and STFU about shit you clearly have no clue about...
31
@28 1 - We are not 'citizens' of Seattle. We are residents. That is an extremely important concept that the mayors office and the city council refuses to accept. 2 - These 'administrators' of the city have legal authority over the 'city', how it functions, and it's property, but the people living in the city are 'citizens' of the United States of America and to a lesser extent the State of Washington or they citizens of another sovereignty (for example, Canada, Mexico, China, etc). But in no way is anybody a citizen of the municipality of Seattle. Regardless, legal authority and moral authority are completely different. A thief is behaving in a moral yet illegal way when stealing food for survival. The city is stealing for greed. That is legal, but immoral. In fact, Seattle apt prices are not out of line with other cities. Move to San Francisco or Vancouver for example. It's much cheaper here.
32
@30, economic 'churning' may lead to healthy indices but it does not lead well being for businesses or residents. Bottom line, if you want a payment plan on your apartment, then plan yourself several months in advance, then when you save the money up, move. Don't make people renting out their condos or houses front you money just because you think the city has the authority to do so. And no, you will rarely find a direct cause and effect in any one detail. But added together, this city is burdening is dwindling middle class and making Seattle an unpleasant place to live or do business. It is not becoming a utopia for the masses, it is becoming a classic Rich/Poor Third World city. I don't think you'll be one of the rich ones.
33
@30:

Citizen, resident - the term used in this context is irrelevant (although Merriam-Webster begs to differ with you), as the mayor and City Council are duly-elected by the people who live here and as such are authorized to have legal standing to enact and enforce laws affecting those of us who live within the city limits - whatever we choose to call ourselves. You may disagree with the laws they choose to enact, and if so you have options available to redress them: you can try to vote them out of office,or try to convince them to not enact laws, or to enact different laws; you can appeal to a higher authority to try to overturn the law; or you can choose to ignore the laws and risk suffering the consequences - that's totally up to you. But, there's no inherent conflict between their legal and moral authority here, as it would appear the consensus of of the majority of citize - er, residents, since that's your preference - is that tenants should be treated somewhat more equitably by their landlords; an eminently moral position if ever I saw one.
34
Higher rents and you'd better have at least a 775 FICO score on your credit report to rent in Seattle. PROGRESS!!!!!
35
@32:

So, it's your contention landlords shouldn't have to "front" tenants money in the form of an extended payment of deposits, but it's perfectly acceptable to force tenants to front landlords money in the form of last month's rent, just because the City grants them the authority to do so, got it. And really, it's not what I THINK that matters; it's what the law states that DOES.

And yeah, Seattle is such a terribly unpleasant place to do business - clearly that is why so many new businesses keep opening or relocating here...

I have no desire or ambition to be "one of the rich ones", I'm very happy with my decidedly middle-class lifestyle - one I'm able to maintain quite comfortably here in the current environment, in no small measure because my landlord isn't a money-grubbing dick. But hey, thanks for the concern-trolling, greatly appreciated.
36
35, the tenants are not 'fronting' money. A property owner has the right to protect his or her property. The property does not belong to the tenant. They are not equal equal partners. If that were the case, then I would be equal to Bill Gates and I wanna steak dinner damnit! So, if you completely reject capitalism at all levels, then good luck to you. What we are discussing is when and how it is appropriate to regulate the private sector. My comment began with the point that you cannot throw every property owner into the same basket. And if the City of Seattle (of which I am a resident but I'll be damned if I'm a citizen of these stalwarts) wants to buy up all private property and become the land barrens, so be it. But I guarantee you that they would be more egregious than individual homeowners.
37
@17 - You don't have to choose a $2000 studio, and you don't have to live in a freezing dump. My neighbor here in Lake City is renting his nice, well-maintained 2-bedroom condo for $1600/month. A friend of mine rents her Roosevelt 1-bedroom for $1400/month. Sorry if those locations aren't hip enough for you, but life is full of choices.
38
@36:

Of course they're fronting money; paying rent now for an expense they won't actually incur for months or even years down the road, and furthermore giving the landlord access to that money to use when the tenant could just as well have use of it at the time. The landlord charges a damage deposit to "protect his property" from abuse - that's why it's CALLED a "damage deposit". Forcing a tenant to pay last month's rent is simply a means for the landlord to collect an additional amount up-front in order to minimize the risk associated with a tenant moving at a time that might be inconvenient for the owner. But, the tenant could just as easily pay that at the time they give notice of their intent to move out within 30 days, and the landlord would still earn that revenue; they just wouldn't be able to derive the extra benefit associated with a Capital Gain (in the form of interest or other investment income) on its long-term use. And the fact that there is a power-imbalance in the relationship between landlord and tenant which clearly favors the former is precisely why the CC enacted this ordinance in the first place; in order to bring that relationship more in-balance.

As for the when and how of the appropriateness of regulating the private sector, well, that's always an issue up for debate. If the private sector had its way there would be no regulation at all, and if their tenants had their way the regulation would be such that they would probably not pay any additional fees whatsoever. So, government steps in to strike a balance that, on the one hand respects the inherent rights of both parties, and which on the other compels each to treat the other equitably. Nobody gets everything they want - that's the nature of compromise - but neither is left at an unfair disadvantage against the other. It's just that landlords have had the upper hand for so long, anything that levels the playing field, even a little, looks like oppression in their view.
39
Property owners ask for a meaningful deposit in advance, before giving a stranger the keys to their home or apartment, in an exchange somewhat like a guarantee, that this person will live in the home and pay the rent and return it at some point in the future, clean and damage-free.

There is no insurance that will protect landlords against unpaid rent or property damage by tenants. There is fire insurance, but that protects against accidental damage, not vandalism. If there was this kind of insurance, there would not be as much of an uproar, but sadly, the landlords bear all of the burden for damages caused by bad tenants. This is why some small property owners are so upset about these new laws. The landlords are expected to hand the keys over to the first “qualified” person who comes around (and one cannot disqualify felons or those who have short-term vouchers that end after a month or two) and they’ve lost their rights of discretion in choosing suitable tenants.

Therefore, I predict there will be fewer rentals advertised and there will be more units rented “word-of-mouth”. Landlords now have to worry about destructive pets (oh, it’s an “emotional support pit bull”) and they have to be wary of being sued by folks who are testers looking to benefit from lawsuits due failure to provide applications in foreign languages or not providing translators. They can be sued for not providing elevators or ramps into their buildings or for not retrofitting buildings and altering the structures to make doorways and showers wider and other accessibility issues. (New buildings should be expected to be accessible to those with disabilities, but expecting 100-year-old buildings to be retrofitted to modern standards is not reasonable — some of these buildings would cost so much to retrofit, it would be more cost-effective to tear them down. And then of course, these rentals will double or triple in cost.)

Expect higher rents, better and higher job/employments/income references needed and the elimination of leases. Month-to-month rentals will be offered more and more, as this will give landlords the option to ask for more of a deposit up-front and allow the rents to be raised more often.

After reading more about these onerous and unfairly burdensome new laws, I think this will exacerbate the rental crisis.

The city has caused this homelessness and lack of affordable housing crisis by allowing and encouraging the destruction of single-room-occupant hotels in downtown Seattle, Pioneer Square and the International District. They have encouraged, through zoning, the destruction of older single-family homes and small duplexes and triplexes and the construction of shiny new (expensive) apartment buildings and condominiums which rent for triple or quadruple what the older buildings rented for.

The City of Seattle, through their short-sighted policies, have caused these problems but now, instead of building affordable public housing, are looking to private property owners to bear the burden of solving this problem.

Instead of beating down the small landlord (who may have saved all their lives to buy a little duplex or build a Mother-in-Law in their basement), encourage the Seattle City Council to step up and build more affordable government housing.

Do you know that the City of Seattle used to own 100’s of single family “scatter site” housing? Little homes in different neighborhoods, all around the city. But now they’ve sold most of them. They’ve torn down High Point and half a dozen other low-income housing projects and instead of using that land to build thousands of more new units, have merely “replaced” the affordable units that were there and allowed developers to build market rate rentals and condominiums on the same land, which hardly help lower-income folks, as they can’t afford to live there.

The city should quit trying to punish small landlords who’ve worked hard all their lives to earn enough money to buy a little rental property. Put the blame and the responsibility where it belongs, on the actions of the Seattle City Council and the Mayor these last 20 years.

40
@39:

Maybe if more of those put-upon landlords resorted to offering leases: legal contracts that specify the obligations of landlords and tenants, and provides redress for breach of the contract; they'd have less to worry about in terms of some of the issues you cite. But of course, contracts also lock the landlord into not arbitrarily jacking up rent by ridiculous amounts, or kicking out tenants on a whim, because they think they can rent to someone else for more money. OTOH, they have more of the assurances you seem to indicate are desired, because the tenant CAN in fact be held legally liable for excessive damage or for breaking the lease and moving before the term expires. But then, that would mean the landlord would have to operate in a rather less predatory fashion, and use their property as a steady, slow-growth, long-term investment, rather than as a more speculative one with higher short-term profit; there are always trade-offs, yes?

Or perhaps you can place some of the blame on your neighbors, like the Queen Anne Community Council, which just made it harder for the City to approve construction of detached "mother in law apartments". After all, you can't blame renters when other property owners impede someone's "right" to maximize revenue on their real estate investment.
41
Gene, thank you for your comment. Spot on.
42
"Rents set to Increase in Seattle at a even faster rate"

There I fixed the headline for you........
43
"A payment plan is what you do for yourself before you spend money. It's called saving some money BEFORE you need it. It's the best payment plan in the world."

That would require being an adult.