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“Chilling effect”: Eviction moratorium strains small landlords

“Chilling effect”: Eviction moratorium strains small landlords

As Governor Jay Inslee contemplates possible changes to his eviction moratorium amid a legal challenge to it, some property rights advocates warn that the situation created by the rule is not only straining the finances of landlords with fewer rental units, but it is also discouraging new rental units from being put on the market.

“It certainly has a chilling effect,” Kyle Woodring told Lens. Woodring is a lobbyist for the Rental Housing Association of Washington (RHAWA), which represents 5,000 landlords in the state.

The WBPA is involved in the ongoing lawsuit against the state’s eviction moratorium, which currently prohibits landlords from evicting tenants for failure to pay rent – regardless of the reason or context. Critics say it’s led to a situation where some tenants simply avoid paying even when they are gainfully employed.

Robert Akhtar is a landlord of an apartment complex in SeaTac. Akhtar told Lens he was in the process of evicting a tenant for nonpayment of rent in 2019 when the moratorium took effect, allowing the tenant to stay and continue not paying. Of the 13 units in the complex currently rented, he now has six tenants who are tens of thousands of dollars behind in their rent.

He added that the tenants have also moved in other family members or relatives beyond what the rental unit occupancy levels allow. “All grown up, all working. I can’t take any action. This is what we are up against.”

While tenant advocates may argue that the moratorium protects people affected by the economic shutdown, Akhtar says landlords like himself have bills to pay, as well. Due to nonpayment, he has not paid his mortgage for the past three months, nor the electricity bill since April.

“It has gravely affected our ability to meet our monthly obligations,” he said.

Although he purchased the rental complex as a planned retirement investment, he now fears he may have to sell – or face foreclosure – if the moratorium is extended into 2021.

“I don’t know what to do,” he said. “It is very scary.”

Woodring noted that the moratorium disproportionately impacts small landlords; 95 percent of RHAWA members have less than four units. In those cases, the landlords are often renting out inherited property such as single-family homes or are purchasing duplexes and renting out the other half.

“They’re not in the business of being a landlord,” he said. “If you live in one unit and you’re renting out the other half, and they’re not able to pay rent, you’re in a much more dire situation than if you’re in a 300 unit building and a small percentage of those folks don’t pay rent.”

The consequences can manifest in several ways. For Akhtar, the financial drain means he can’t finish renovating, and ultimately renting out, a unit that is 80 percent complete. A potential landlord is also unlikely to rent out a residence amid an eviction moratorium. Woodring also believes a wave of foreclosures is coming in the spring.

But Woodring said the moratorium is just one of many things giving landlords anxiety – other things are in the mix as well, including a possible capital gains tax and a new graduated real estate excise tax (REET). Lawmakers in recent sessions have also sought to impose greater regulations around evictions and lease agreements.

“We’re seeing that (anxiety) now amongst our membership all the time,” Woodring said. “They are certainly looking at selling. I am getting that question daily. We’re a small subset of a vast real estate world, and sometimes I worry because we’re such a small subset…that we sort of get put to the end….”

TJ Martinell is a native Washingtonian and award-winning journalist. Born and raised in Bellevue, he’s been involved in the news industry since working at his high school newspaper.

His investigative reporting for various community newspapers in the Puget Sound region has been recognized by the Washington Newspaper Publishers Association and the Society for Professional Journalists.

A graduate of Eastern Washington University, he has a B.A. in journalism and was the news editor of EWU’s student university newspaper.

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