Last week, a committee of the Seattle City Council rejected a proposed ordinance to limit late fees for apartment renters to $10 a month. The $10 limit was a proposal of Councilwoman Kshama Sawant, a renters-rights advocate who is leaving the council at the end of this year. Seattle’s newest council member, Sara Nelson, had the votes to replace Sawant’s $10 cap with a cap of 1.5 percent per month, with a maximum of $50.
Sawant had led the push for the $10 cap in her Sustainablility and Renters’ Rights Committee. But the vote on April 7 was 3 to 2 for Nelson’s less-radical 1.5-percent limit, with Tammy Morales supporting the $10 and Debora Juarez and Andrew Lewis supporting Nelson’s proposal of 1.5 percent. Nelson’s 1.5-percent ordinance goes to the full council on April 18.
Before the April 7 meeting, Sawant’s supporters had collected several pages of renters’ late-fee stories to back up the campaign for a $10-a-month cap. At the meeting, the committee listened to more stories on the $10 limit. People reported being charged $50 a day or more — “a tax on being poor,” one called it. Renters are living “paycheck to paycheck,” one said. “Ten dollars is all we can handle,” said a woman who a year ago was homeless. Another tenant labeled Nelson’s 1.5 percent proposal a “pro-corporate-landlord amendment.” Almost all the public testimony was against landlords and for the $10 limit, though much of it was obviously scripted. Several began their testimony by saying, “I urge the Democrats on the Council…” as if they were reading off cue cards.
The argument for a limit of $10 a month was about renters who are poor. In response, Councilwoman Nelson argued that a percentage limit is a better rule for all incomes. By one survey, she said, the median rent for a 1-bedroom apartment in Seattle is $1,787 a month. At that level, 1.5 percent is $26.80. Low-income people are presumably renting for less than the median and would be liable for less than $26.80. The 1.5-percent cap wouldn’t reach $50 unless the overdue rent was at least $3,334. Why the fee should be capped at rents above $3,334 Nelson did not say.
Councilwoman Juarez agreed with Nelson. Juarez called the 1.5-percent cap “a nice, straightforward, commonsense approach.” Councilman Lewis agreed, saying a 1.5 percent cap would be “a significant progressive step forward,” and that it would not “be sustainable to keep the number at $10 in perpetuity.”
“Why should [the $10] need to be revised?” Sawant replied. “There shouldn’t be any late fees, really. Why would you choose to be late in paying rent that you know you have to pay anyway?”
Sawant was miffed that her $10 limit had been derailed. She derided the “pro-landlord” councilmembers supporting Nelson’s “shameful amendment.” Still, in the end she voted to pass it on to the full council as “an enormous step forward for renters.” She assured her supporters that half a loaf was better than none. “If we didn’t fight,” she said, “we wouldn’t win anything at all.”
Sawant did have one supporter on the committee for her $10 limit: Councilwoman Tammy Morales. “Tenants shouldn’t have to pay for an investors’ obligation to maintain his investment,” Morales said. “The fact that we even talk about housing in this way as somebody’s business, somebody’s investment, is part of the problem. If housing is a human right, we shouldn’t be commodifying this.”
How to square the vision of “housing as a human right” with the reality of owners offering properties for rent? The issue is much wider than merely a question of late fees. The council has tried to strengthen the hands of tenants by passing ordinance after ordinance defining what owners cannot do, and requiring more things they must do. Here is the council’s list for City of Seattle actions of the past six years:
2017 – First In Time Law
2017 – Security Deposit Cap
2017 – Move-In Cost Installments
2017 – Criminal Records Ban
2017 – Tenant Packet/Voter Registration
2018 – Source of Income Law
2019 – Property Damage Law
2019 – Notice of Intent To Sell
2020 – Roommate Ordinance
2020 – Winter Eviction Ban
2021 – Fixed-Term Lease Mandatory Renewal
2021 – School-Year Eviction Ban
2021 – Tenant Right to Counsel
2021 – 10% Rent Increase Relocation Assistance
2021 – COVID Hardship Eviction Defense
2021 – 180 Days Rent Increase
2022 – Limit COVID Repayment Plans
2023 – Late Fee Cap (pending)
These came on top of ordinances already in place — the just-cause eviction ordinance of 1981, the 60-day notice of rent increase law of 1998, etc. – as well as several state laws and federal laws imposed in the past four years.
Each of these laws was written to promote tenants’ rights. The property owners argue that the measures were passed quickly, without careful thought of the consequences. One result is that it has become more difficult for the owner to evict a tenant for annoying and threatening other tenants.
Only a few of these cases have been reported in the media. A notable one is a story from December 21, 2022, by Isolde Raftery, investigations editor at KUOW-FM. The following account, condensed from the KUOW story, begins with Bobby Hawran, a retired longshoreman, who in 2021 rented a $2,150-a-month unit in the Janus Apartments in Seattle’s Greenwood district. The Janus was a new, upscale place that catered to young professionals. Shortly after, the account continues, a couple with a preschool son moved in with Hawran and began operating an illegal drug business. In the summer of 2021, Hawran stopped paying rent, but it was Covid time, and building management could not evict him or his invited company.
Hawran was reported to be a drug user, and on Aug. 5, 2022, he died of an overdose of fentanyl. His male guest had already died of similar cause. Someone, presumably the woman (whom the story does not name) quickly used his debit card to withdraw $12,500 from Hawran’s account before his sister was able to close it. At this point, no rent on the apartment had been paid for a year.
By this time, the moratorium on evictions had run out, and the Janus called police to have the woman evicted. She claimed to be Hawran’s fiancée. Under the Roommate Ordinance passed by Seattle’s City Council in 2019, that gave her the same rental rights as Hawran, though she had never applied to live there. The Janus could not evict her.
After Hawran’s death, a homeless camp sprouted on the public sidewalk across Northeast 85th Street. Residents of the Janus complained of comings and goings from the tents and of shouting on the back stairs. Residents filmed money changing hands, presumably for drugs. They complained to police, who said there wasn’t enough evidence of a crime.
The Janus hired a security company. In the alley behind the apartment house, an intruder shot and wounded the building’s new security guard. Finally, the police got involved. Janus management also exercised itself by paying the woman in Hawran’s apartment to get her out. KUOW’s Isolde Raftery concludes here story: “After the woman left the Janus, the encampment across the street dispersed. The Janus was quiet again.”
To small landlords, the Janus case is alarming. The owner of a big apartment complex, or many such complexes, can absorb the financial cost of an episode like that, but for the owner of a few rentals, it would be a disaster. Angie Gerrald, owner of three units in Seattle and an organizer of Seattle Grassroots Landlords, says the city’s Roommate Ordinance is particularly troubling. “If we have a lease with two people, they can bring in up to two more without telling us, then add them to the lease,” she says. “I want to know who we have a contract with. We need to know who’s there.”
Gerrald and her husband have been renting units in Seattle for 20 years. So far, she says, they have done all right, but they are troubled by the layering on of obligations and risks. “So much has changed so quickly,” she says. “There’s landmines everywhere. Nobody’s looking out for us.”
Their friend on the council is Sara Nelson, a Fremont Democrat who had a hearing of “small business housing providers” (they detest dislike the name “landlords”) in March. At the hearing (which was not attended by any of the other council members) Jennifer Lekisch, owner of several houses and duplexes in the Queen Anne and Capitol Hill areas, said, “It’s gotten really difficult to be a housing provider… There is just too much risk that our residents will not pay their rent, and there is no consequence when they don’t pay. I had a tenant last month that paid her rent 17 days late; had there not been a daily penalty, she might not have ever paid.”
Kaitlyn Jackson, an attorney at Dimension Law Group, Tukwila, says the new rules create an incentive for small apartment owners to get out the business. “A lot of them held on through Covid, thinking, ‘This is a Covid thing,’ but things have not changed for the better. My clientele used to be lots of mom-and-pop local investors. Now it’s large property management companies.”
City of Seattle data show the number of rental units consisting of houses and small apartment buildings (20 units or less) fell by 17 percent between July 2018 and August 2022. In the same period, the number of units in larger apartment buildings went up.
The cause, Jackson says, is the enactments that burden property owners with more and more risk — and that expose other tenants to risks to their safety and security. “Mom-and-pop housing providers are leaving the market in droves,” the attorney says. “We’re making big errors if we want to make housing more affordable.”
A very well written argument, Bruce, but the Janus story has got to be an outlier in making this case. I’ve lived here for twelve years and have never been late a single time on my rental payments. Yet I’ve been paying people’s mortgages for that entire stint, with no hope of being able to purchase my own property in this city. Seems to me small landlords have it pretty good. They even nickel-and-dime me out of my security deposits.
-Eric
I am the “Pop” part of a small, Mom & Pop rental housing provider, a.k.a. landlord of a rental house. You intimate that anyone who owns rental property in this area should consider themselves lucky, and I do share that feeling. But along with the good fortune there is also the worry that comes from owning a property that one is not occupying — the expectation of unforeseen problems cropping up: something breaking, or random vandalism. Will the tenants treat the house as a home, or as “just a rental” and leave things a mess — or worse — when their lease is up. Or want to break the lease as when we were counting on the income and cannot easily get a new tenant. Or decide that they don’t want to pay rent anymore and skip out owing several months rent. Worst of all is having to evict someone — there are many legal hoops to jump through, all of which cost time, money and gray hairs. The list of potential worries is a long one, and I again say that we have been fortunate in having had pretty good luck with our Seattle tenants, who like you have been respectful of the terms of their rental agreement, but there is always the chance of having a problem. And since renting is a business, the cost of potential problems has to be factored into the rental rate. When small housing providers like me hear the stories like the one in Bruce Ramsey’s article (the Janus apartment saga) we get very nervous and think seriously about selling out, possibly to a private buyer but conceivably to a developer. The typical rental property is likely to be an older “starter home” — say a 1930’s 2 BR on a standard sized lot — which could be torn down and replaced with a duplex or triplex if zoning laws permit (watch to see what happens with the proposed WA density legislation). New development could conceivably make matters worse for potential renters, as the cost of new construction will likely result in a higher rent being charged for each new unit than did the original home.
In fairness to the City Council I should add that small landlords having 4 or fewer units were exempted from some, though not all, of the recently imposed changes to rental regulations. Still, regardless of whether they are or are not reasonable measures, the cost of compliance with the new regulations — and the degree of control an owner loses over their own property — add to the downside risk of private rental property ownership, and hence to a greater share of rental housing stock under corporate ownership.
It seems like existing property law funnels almost all “risk” down to the lowest rung of the ladder, i.e. the renter. Your argument that eviction is “hard” on the landlord is a bit unsympathetic. It’s unfortunate for both parties, but more so for the renter. Matthew Desmond’s EVICTED is a terrific book on that front.
People clearly need to pay their rents for any of this — i.e. society — to work. But shouldn’t there be at least a little bit of risk in purchasing a home and having someone else pay your mortgage? This is how older generations have made much of their money. It’s a financial pathway protected by legal precedent yet closed to Millennials. The lenient late fees Bruce mentioned seem to take some “risk” away from the renter, and put it back on the landlord.
From a young person’s perspective, we might want things to travel in this direction. Corporate ownership is clearly not a good outcome, and like you said, it would be optimal if the Council had a different set of precedents for small landlords than corporate holding companies. It sounds in some cases like they do. If these laws are just going to result in more holding companies, then they should to be changed; I’m with you there.
The lenient late fee policies seem partly aimed at preventing people from being thrown into a cycle of homelessness, which is the thrust of Desmond’s book. So I’m not exactly disagreeing with you. Just some food for thought.
Important context: City council has had very very few exceptions for small landlords. I can think of only one for small landlords with 4 or fewer units (winter eviction ban) and a couple for landlords who live on-site (like with ADUs or shared housing), amongst dozens of hastily passed policy changes in recent years. The majority of new laws apply to all sizes of landlords and are having very disparate outcomes for small rental property owners (and their tenants). The result is far fewer people are willing/able to rent housing to other Seattleites and those who do are goaded into bumping their rent higher and setting application criteria far more stringently than before FIT and other new laws took effect. That’s not good for Seattle renters, unless you are high income.
Also, Seattle/King County has one of the lowest eviction rates in the nation, so the situations described in the Eviction book you cite are often not an accurate frame of reference here. Our municipal laws and local legal system are different from many other areas nationally.
It’s sad how little dialogue and analysis city leaders are willing to have on this important issue. Their political myopia and imbalanced policymaking are accruing far more unintended impacts than they are willing to admit. We need more housing, of all kinds, and they are actively deterring an important segment, aka “naturally occurring affordable housing.”
I am not unsympathetic to renters but I was making the point that there are downsides — financial risks — to rental property ownership; these are sometimes summarized in a snarkish manner as “Taxes, toilets and tenants”, with evictions being an example of when tenant relations go seriously wrong. They don’t just happen for no reason, and are often due to failure of the tenant to keep up his side of the bargain by paying rent in a timely manner if at all. . Going through an eviction process is not just a “hard-in-air-quotes” for the owner of the property, but a real loss-making proposition, a financial setback like losing a job, with the added stress of going to court and the expense of involving a lawyer. (I am speaking here about the situation for small landlords, not corporate ones who may have to deal with them on a regular basis).
One of the reasons for a low eviction rate could be that in Seattle, eviction is such a slow, stressful and expensive process that it is often in the best interest of both tenant and owner to try and settle disputes without recourse to it.
To make related point: house prices in our area are very high compared to other areas of the country, but rents, although higher than a decade ago, have not kept up. As a result, at currently prevailing prices and interest rates, using a mortgage to purchase a single family home with the intent of renting it out is likely not a viable business plan, unless your plan is to lose a lot of money.
Yep, Its a problem. but these issues do not just apply to small landlords. it the “market” is going to provide housing then the market, although subject to the light hand of reasonable regulation, cannot work in a hostile political environment. not only will landlords shy away but so too will lenders and investors.
Thank you for this – I do hope to see UW or another neutral party analyze any data available here to really understand how these laws have impacted the housing market. I think consolidating our rental market to corporate landlords is a bad idea on a lot of fronts. It galls me that on the one hand we are waiting for “the market” to bail us out of this housing crisis, and on the other, we are chipping away at a functioning market by rigging it against housing suppliers – landlords!
It’s mind boggling. But there are even more ludicrous laws the City Council imposed on small homeowners. The “first-in-line” renters’ law requiring that the very first “qualified” applicant to fill out an application gets the keys to your home, that you saved up to buy (in my case), that you hold ALL of the risk for? Can you imagine the furor, if employers were required to offer a job to the very first applicant that checks all boxes? Why is this even the business of the City Council, to begin with?
Thank you for this well-written article finally illuminating what it’s like to rent out one’s home in Seattle. Whether you own one or several, it’s a risky way forward … While it’s true the tenant helped me pay my mortgage (though the rent was considerably less than what I shelled out to Bank of America every month), I also provided a comfortable, freshly painted and carpeted, safe, clean, affordable and modern place to call home very close to the UW. I don’t think I could ever do that again. The risks far far outweigh any benefit.
An excellent piece. To see all the laws recently enacted in one place is very helpful, and confirms my sense of being under siege as a housing provider. In response to some of these laws and the increased risk they add to my property I changed my rental application requirements to match those of corporate apartments. For the first 4 years of having a detached rental cottage on my property I had a series of tenants who applied as new residents to Seattle. They had very low-to-zero income at the time of applying, but they showed proof of savings, intentions to get jobs, employer references—and I liked them. I took 100 % of the risk. Both sets of tenants proved to be wonderful. Although one tenant had used a room atomizer scent that I have never been able to eradicate (even after $800 of painting) I did not charge him for that and gave him back his deposit in full because he needed it when he lost his job in the pandemic and was forced to move.
Now, after the new and tenant-biased regulations? Applicants must have a full time job and it must equal three times the rent. The rent has gone up from 30% below market to 15% below market. And I have seriously considered taking the apartment off the market entirely, as many other small landlords have already. My understanding is that in the first year of “first in line” 3,000 rental properties equaling 10,000 units were sold or removed from the market. (RHAW https://mynorthwest.com/3427627/seattle-loses-nearly-3000-rental-properties-in-less-than-a-year/amp/)
The Council has for years been passing laws using the logic of resentment politics: “if somebody has something I don’t have (yet, or perhaps ever) they should be punished.” The line in comments about renters “paying the landlords’ mortgage” is often used, and is absurd. The only people who can buy $300-$800k houses outright without a mortgage have inherited wealth, have previously amassed assets they can sell to buy a house with cash (“the rich”) or are REIT’s who use the renter’s monthly payments to pay dividends to shareholders and astronomical wages to CEO’s.
If the Left wants ANY small locally owned landlords to survive it needs to work with reality, not Marxist pipedreams. RHAW and a consortium of small landlords has been urging the Council for years to hit pause and measure the results of legislation before enacting more. But they have refused, and ideological obsessions with “justice” rule, at the expense of those the legislation is supposed to help.
Thanks for the article, Bruce. We had a condo rental to supplement retirement until the COVID rent moratorium. Our renter just stopped paying rent in any amount. Several thousand dollars later in unpaid rent, we were forced to sell the condo. The renters left as the condo was sold. We will never see the unpaid rent, with no way to recover.
I am sorry to hear of this, Peter. I shudder to think how many homeowners this has happened to.
Thank you for providing the list of regulations and excellent analysis. What we see here is Progressive Liberal ideology in practice. This ideology, which is dogma and not subject to discussion (unless you want to be cancelled), is based on the Marxist principals of pitting one group against another. As in every issue for Progressives, there is a victim and a perpetrator. This ideological approach for Progressives therefore pits the 99% against the 1%, people of color against whites, women against men, LBGTQ+ against straights, etc, etc. In this case, the victims are tenants and the perpetrators are landlords. As a result, the legislation that the Progressive-dominated Counsel has produced benefits for the perceived victims (tenants), all at the expense of the perceived perpetrators (landlords). Nothing balanced, no give-and-take, nothing to compensate for things taken from or imposed on landlords in favor of tenants. The legislative score is 18-0 in favor of the tenants since 2017. The intended results do not follow. The issues become worse, not better. Hummm.
Thanks for the list of new legislation. The City Council wants to make rentals cheaper but heavy-handed legislation such as this will do just the opposite and make rentals eventually more expensive and much harder to find. As small property owners rally to protect their property, they will tighten requirements making it difficult for anyone but stellar renters to qualify. Or they will sell their property, perhaps to developers who will scrape them and built luxury townhomes. Or perhaps the housing provider has average units. They may remodel their units and move them from “affordable housing” to “Luxury Units” in order to bring in enough rent to cover costs. They should think hard about enacting this legislation, as you will see a mass exiting and shortage of rental properties. The large corporate-owned buildings will stay but the smaller and more desirable single-family homes and small multi-family units will gradually disappear.