Oregon has become the first state in the nation to pass a statewide rent control law (Senate Bill 608). Rent control is currently allowed in some states but prohibited in most – 37 to be exact. Even in the states that allow rent control regulations however, it is usually up to cities to decide whether to enact them. Usually, bigger cities like Los Angeles, New York City and San Francisco are more likely to utilize rent control or stabilization than smaller municipalities. Senate Bill 608 will change this dynamic from permissive to mandatory in Oregon. Now, any qualifying household in the entire state must abide by the law. The bill is causing a considerable amount of dissension, with support and opposition split expectedly along party lines: Democrats for, Republicans against. Proponents of the bill believe it will provide much-needed tenant protection, while opponents think it may make searching for a rental property harder and deter investors. Either way, the bill makes history as the first of its kind.
The statute, which takes effect on March 30 for month-to-month renters, sets forth a cap on yearly residential rent increases and makes illegal eviction without cause. This provision was put in place to stabilize the rental housing market, as tenants have struggled more and more to afford ever-increasing rent rates in the state. The law disallows rent increases over 7% year to year, plus the consumer price index, which is decided annually. Praised by some as a reasonable and necessary regulation, the rent cap provision has also been criticized by both sides of the aisle. Some denounce the regulation as too stringent, while others who normally applaud rent control claim the cap is too generous and still allows landlords too much leeway to raise rents.
Additionally, landlords are now prohibited from evicting tenants without just cause, a problem which has negatively affected many Oregon families in the recent past. Now, a landlord must have an adequate reason for eviction after the first year of tenancy. Even during the first year however, a landlord must give a month-to month tenant 30 days’ notice of eviction. In some cases, the landlord is even required to compensate the tenant to some degree. After the first year, the landlord may evict only for “qualifying reasons” enumerated in the statute. However, tenants must pay rent in a timely manner and keep the property in good repair in order to have this protection.
When reviewing the provision’s first-year caveat, one might ask why a landlord would not evict a tenant during the first year, just so they could raise the rent for the next tenant. The answer is, because the bill’s creators already thought of this and wrote in a supplementary provision prohibiting landlords from raising rent after they evict a tenant without cause within the first year. Therefore, the provisions work hand in hand to protect the tenant and disincentivize strategic foul-play on the part of the landlord.
In general, after a state passes an unprecedented piece of legislation to ameliorate a specific issue, the question arises as to what comes next? Will Oregon remain the only state with mandated rent control or will other states follow suit? The answer likely lies in whether the problem exists in other places, and whether the regulation works and how it impacts the market and general economy of the state. Here, the law was created to help fix the worsening affordable housing crisis and temper rent rates that were driving people out of their homes and communities. Affordable housing is an issue that affects almost every state in some way, so that answers the first part of the question. The only part that remains unanswered is how the real estate market and state economy will respond to the law. The short term will be visible shortly, as the law will instantly apply to more than 500,000 households. The long term, however, is more uncertain. Economists will undoubtedly be keeping tabs on the market and conducting before and after analyses annually, at the very least. Depending on how it pans out, the future of rent control in our country remains to be determined.
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