René Nelson, CCIM CRE, and Jim Straub, Legislative Director Oregon Rental Housing Association, examine the impact of Oregon Rent Control Senate Bill 608 on multifamily property owners. Learn from the experts about the limits on rental increases and the exceptions to the rule.
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René Nelson: Let’s discuss the impact of this bill on multi-family owners. Will the new law apply to everybody that owns rental property in the state of Oregon?
Jim Straub: This new law will apply to every single rental owner in the state of Oregon. There are some provisions that will lessen the severity if you own four units or less. If the tenant would be entitled to one month’s rent relocation expense, if you asked the tenant to move on a for-cause basis. Then under certain provisions, the commercial property owner will have to pay for one month’s rent relocations expense to the tenant. If you have four units or less, then you will not be subject to that. If you are an owner occupied in two unit or less, if you have an accessory dwelling unit or a duplex that you live in one side of, then you also will not be subject to the one month’s rent relocation expense.
Does the Bill Limit the Amount of Rental Increases?
René Nelson: The bill limits how much you, the landlord, can raise rents, correct? My understanding is it’s currently set around 7 percent, plus CPI, so call it 10 percent right now.Jim Straub: Correct. The bill is limited to 7 percent as the floor and then CPI of the western region. So the western region last year was 3.3 percent. So if this bill was in place for 2018, we would be limited to a 10.3 percent rent increase this year.
René Nelson: Now that’s significantly higher than what the average landlord raises rents, unless they’re trying to catch up or, we’re in a crazy market and it’s outpacing what is traditional. Would you agree that most people don’t raise their rents 10 percent on an annual basis consistently?
Jim Straub: I agree, and that’s purposeful in the negotiations of this bill. They were originally asking for rent caps of 2 or 3 percent, but there are a lot of factors that go into raising rents by landlords, not just profit based. We have deferred maintenance that needs to be planned for and budgeted for over time. And by having the flexibility of a 7 percent plus western region CPI, that allows us to keep on top of those deferred maintenance parking lot replacements, sewer line replacements, roof replacements, and so forth. If a good landlord is keeping on top of their rent increases and raising a little bit each year, then they should be able to accommodate those deferred maintenance items in the future.
Are There Exceptions for Newer Buildings?
René Nelson: I know one of the restrictions has to do with 15 years. If a building is newer than 15 years, the new laws do not apply. Talk to me about that.
Jim Straub: There’s a carve-out for buildings that have received their occupancy permits or their certificate of occupancy within the last 15 years. That’s specifically designed not to discourage new construction and new investments. For the first 15 years, you will not be subject to any of the rent increase restrictions. You can raise the rent 100 percent per year if the market will bear it.
For more information about the Oregon Rent Control Senate Bill 608 and how it affects Oregon rental property owners, call me today: René Nelson, CCIM, (541) 912-6583 / email@example.com / www.eugene-commercial.com