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Sawant, community groups ask City Council not to water down Seattle move-in fee cap — UPDATE: Approved

No, District 3 rep Kshama Sawant hasn’t joined the NASCAR circuit. Those 26 logos she is sporting this week represent what she says are “the 26 community, labor, and faith organizations” calling on the rest of her City Council colleagues and Mayor Ed Murray to pass legislation capping move-in fees in Seattle, the political battle Sawant has put most of her local muscle behind in the final months of 2016.

The bill again worked its way out of committee and will be in front of the full city council Monday afternoon. UPDATE: The bill has passed — along with an amendment described below. New renters can expect the restrictions to be in place sometime early in the new year.

“The council passed a strong version of the Move-in Fee Legislation out of committee,” a letter posted by Sawant signed by representatives of the 26 organizations reads. “We urge you to pass this legislation at full council without exempting any landlords or passing other amendments that weaken the legislation.”

The full council will consider a proposed amendment from District 4 rep Rob Johnson representing Northeast Seattle would “exclude single-family residences where the owner maintains a permanent residence.”

Sawant and the community groups say that any additional amendments would “drastically reduce the number of tenants who will benefit” from the legislation:

Properties with one to four units make up a substantial portion of the rental market in Seattle. According to the Seattle Department of Construction and Inspection, 21,702 rental properties have one to four units, 1,910 rental properties have five to 10 units, and 2,591 rental properties have more than 10 units. Because some deadlines for registering small properties have not yet passed, the number of registered rental properties with one to four units will go up.

Sawant’s bill has traveled an unusually circuitous path. In September, District 5 representative Debora Juarez successfully lead an effort to kick the bill back to committee, citing concerns from the city departments that would need to enforce the restrictions.

Under the measure, landlords could only charge tenants the first full month’s rent upon move-in and would need to allow tenants to pay the security deposit, non-refundable move-in fees, and last month’s rent in installments. In addition to pushing the bill back for more work on enforcement, Juarez was able to successfully amend the bill to allow landlords to decline to offer an installment plan for move-in costs if costs remain less than 25% of the monthly rent.

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34 thoughts on “Sawant, community groups ask City Council not to water down Seattle move-in fee cap — UPDATE: Approved

  1. FTFY


    Reality Broker says that any additional amendments would “drastically reduce the number of small, mom-and-pop landlords who will be harmed” from the legislation.

  2. The purpose of a security deposit is to provide security to the landlord, whose building is their investment. What happens when a tenant moves in, pays the first month’s rent, and then stops paying anything including security deposit, and causes damage to boot?
    The unintended consequences of this and the first come, first rented rule will be for landlords to do all within their power to advertise in very closed manners, seek word of mouth referrals from current tenants, impose high credit and background standards, raise the first month’s rent and other maneuvers to maintain their rights to security of their units and select trustworthy tenants. While I recognize that some live hand to mouth, is a person who can’t come up with a security deposit really the sort of individual who a landlord wants to rent to if they have any choice? If a person goes out to a restaurant, smokes a cigarette, takes a vacation, owns a car less than a decade old – they are capable of saving a couple thousand dollars in their lives. And if they don’t have a couple thousand dollars, what happens if they happen to lose their job while renting? The landlord becomes their donor? No thank you.

    Can’t wait for the opportunity to replace Sawant, O’Brien, Murray and more.

    • I think the cap is important. Let’s say I want to rent a small house in Seattle. If I need to come up with first and last month’s rent and a security deposit that equals one month’s rent that can’t be paid in installments, you’re talking about ~$6000 (Are there small houses in Seattle proper that rent for less than $2k/month?). Do you have $6k right now in your account that you can drop without it hurting you? If so, fantastic, but you also probably make well into 6 figures, and the legislation is for people who don’t. If you make $50,000 a year (hardly a deadbeat loser), you probably can’t afford $6000 up front. Actually, you can’t afford to live in Seattle proper anyway, so I guess you’re right, let’s get all these freeloading people who make less than $80k out of this city of ours!

    • So in other words the fee paid by the prospective tenant to have their credit history examined is not enough for the landlord. They must also have a non-refundable “screw you” fee, just because.

      Your argument for this legalized robbery (in plain daylight to boot) is absurd. Landlords are not exempt from risk, just like the rest of us. If they can’t handle the heat … well you know the rest of it. By the way, there are a plethora of laws that protect the landlord’s interest from the occasional and rare bad tenant. The probability of being burned by just such a tenant is by the way already baked into the cake – the rest of us tenants pay for this probability through a portion of the rent we pay each month.

      Your arguments suck

    • response to data driven 2.

      Example.
      Mr X rents an apartment Jan 1. Pays first (jan), last (dec) and a security deposit. He needs to move on the following January. To move into his new place he needs to pay First (jan) which he should be able to because it is his usual rent payment. He needs to pay last month (Dec) which he should have as he didn’t need to pay his last December rent (he should put aside the normal rent so he has it for when he moves) and he needs to pay a security deposit. Within 2 weeks he should get back his security deposit from he previous apartment if he left it in the condition he received it in. If he leaves it clean and undamaged he should get the majority of his deposit back. So, what is the problem. It is not like moving comes as a surprise. Plan a little, clean up your apartment when you move, don’t break things in your apartment, when your last month comes up, put the money aside for your move. It is not rocket science. Poor planning on your part does not make it an emergency on my part.

    • @datadriven2

      this legislation doesn’t do anything for those that really need it. if you can’t afford to save for move-in fees, 6 months prior to moving out of your current place, how are you going to afford to pay back those fees over 6 months once you move into someplace new?

      if you can’t afford to move, you can’t afford to move period. making landlords accept installment payments only helps those who can already afford to move spread their initial costs over a longer time.

    • Data Driven: Can landlords purchase insurance policies to shelter themselves from the risk of the damage you describe? If they suffered losses of a variety of other sorts, the cost would be covered by insurance, no?

    • Zarna, if you could previously rent that place for $2500 per month, why weren’t you doing so?

      Don’t forget that you can go do business in someplace more hospitable to your business plan: Auburn, Renton, Maple Valley, or wherever. Nobody is forcing you to stay here. If it doesn’t pencil out for you in Seattle, maybe it’s time to let someone else take your spot.

    • @ JC – Mr. X doesn’t need to pay his last month’s rent, because he paid first month/last month/security deposit when he moved in. Therefore his December rent has already been paid and Mary is totally correct. Anyone moving from an apartment with this financial setup into an apartment with the same setup should have this pool of money available, unless they are moving to a far more expensive place or coming from a situation where they were not paying the rent (moving out from the dorms – parents – room mate arragement etc).

  3. As a small landlord, I can confirm everything Data Driven said. Unless there is a better workaround, I will, at the very least, be drastically increasing my rents and acceptable credit scores. I will no longer be able to accept the perfect tenant with the bad credit score, as I have in the past. Even the higher rent, except over the long term, will not adequately compensate me for my increased risk in renting to “first come first serve” with no skin in the game (security deposit). I’m considering doing a 1031 exchange to move my business out of Seattle. Should I do that, almost certainly my units will revert to owner occupied, and Seattle will have lost affordable rental housing.

    • Why would you have to raise rents? This law just gives people an option for an affordable move-in. Landlords still get a deposit. They still get the same amount of money. In fact, the law even allows for people to pay the whole move-in cost up front if they are able. They even get monthly rent after that (like usual). this really changes nothing for landlords, but gives literally 60% of Seattle households (City’s numbers & American Community Survey’s numbers) a way to actually afford to stay in the city.

      Raising rent does nothing except continue to increase the barrier to renting for people like teachers, nurses, custodians, etc and this rhetoric honestly just sounds like another excuse to make a bit more money. Rents on Capitol Hill have gone up 100% in the past 10 years. Has the liability for landlords gone up too? What’s the reasoning behind that?

    • @Tired
      “Landlords still get a deposit. They still get the same amount of money.”

      State law allows evictions only on the basis of unpaid *rent.* There is nothing to stop tenants from ceasing to pay installments on their security deposit, and, so long as they continue to pay the rent, they cannot be evicted. With no security deposit, the landlord has no leverage to dissuade tenants from damaging the unit. In general landlords care about only two things — the rent gets paid on time and the property is left in good condition (less normal wear and tear).

      This new ordinance, in conjunction with the “first come, first serve” ordinance, removes any discretion the landlord might have in whom to rent to. As I mentioned in my earlier post, I have, in the past, rented to someone with a less-than-stellar credit rating but who otherwise had stable employment, a good income, and was in every other way a good prospect. This I would not be able to do under the new rules.

      If I continue to own and operate rentals in the City of Seattle, I will probably draw up a list of non-negotiable qualifications to give prospective renters before they apply. Top of the list will be “verified gross annual income four times annual rent,” i.e., for a 3-bedroom house that rents for $2000 a month, a verified annual income of $96,000; and an as-yet-to-be-determined minimum credit score — say, 700.

    • Soo Valley,

      Exactly. I’ve already had to impose a mandatory 5 year minimum rental history (thanks to first-come first-serve), ruling out anyone who is new to renting.

      If I’m no longer guaranteed a damage deposit, I’m guessing next step will be a 3X or even 4X minimum income-rent ratio, which will effective price out anyone but the wealthiest people from my units.

      Alternatively, I’m curious if one can legally require a mandatory liquid asset requirement for rental as well (which would have the opposite outcome of the goal of this law if done widely).

      I feel like a douche for doing these things, but I’m not sure how our city leaders don’t seem to understand it’s not a trivial thing to entrust a $500K asset on a $2500 deposit.

      Now we’re being required to entrust it simply on personal faith to a stranger who we are no longer even allowed to choose on their merit.

    • In fact, adding tougher qualifications to the list prospective tenants must already meet will make my job easier. Since I am required to take the “first qualified applicant,” I really only need one. At my last open house I had more than 100 people show up; how much simpler just to have the one qualified applicant cross the threshold and sign a lease.

      One addition qualification that just occurred to me: requiring a minimum of two years’ employment at current employer (shows income stability).

    • That’s been the surprise for me, too!

      Before I always insisted on most inclusive rental criteria possible. That meant hours and hours screening a lot of people just in case I *might* have rented to them.

      Now that I’ve moved the bar to the most extreme level (courtesy of our own city’s laws intended to increase inclusion — oh the irony!), I only work with the handful of applicants who comprise the most qualified and privileged.

      It definitely saves a lot of time. I guess I should thank Lisa Herbold.

  4. Homeowners often carve an apartment out of their house or give up a part of their yard for a back house, because they need the money. Wealthier homeowners are of course less likely to sacrifice part of their own living space if they don’t need the extra income. I know people who need to have a basement apartment to keep their homes. One factor here is ever increasing taxes, another is the impending increase in mortgage interest rates. This legislation is intended to force landlords, even those who are renting out a basement apartment in their own home, to take more risk – much lower rental deposit and you have to rent to the first person qualified on paper that asks you. Another measure to drive more middle class homeowners out of the city.

    But hey, middle class homeowners are a bunch of nefarious, greedy capitalists who need tight regulation lest they take dastardly advantage of the tenant living in their basement apartment, right? Our city council, led by a doctrinaire socialist, has really gone off the deep end at this point.

  5. Totally just put my security deposit on layaway…

    I suspect this is just a longterm play to make the rental market look worse and worse for small/individual landlords. Then Amazon can swoop in, buy up all the houses and small multifamily units and take over the rental market with massively reduced overhead and automation.

    Just. kidding.

  6. Now.., let’s put a freeze on increases! Not all
    People renting are Employed by the Tec. Industry!! You have Seniors that have lived in the city 35 years of there life being pushed out;
    Your Starbucks employees that cater to these Tec corporations; as the majority of the city are not high paying jobs; being pushed out by corporate greed!! Concerned Seattle is not
    Celebrating the base but only the filtered influx of the Tec. Companies. Get rid of the base and you will not have a diverse Seattle!

  7. Are you landlords all self-insured, or what? Sheesh–push the risks of doing business to your insurance companies like any other business and cut the scaremongering. You’re already charging what the market will bear, no? It’s about to go up by the average cost of not gouging people as much as you, collectively (there are exceptions, and I have personal experience with one of them–thanks, Ken), have recently been gouging them.

    Your business’ operating expenses surely have not been increasing proportionately to the recent increases in rent. You’re pulling in hundreds more per unit per month than just several years ago. Were you pocketing all that gravy, or saving up for something like the people’s elected representatives forcing you to treat people better at slight additional expense to you?

    • One data point —

      I’ve raised rents by about 8% (total) in 2 year. City property tax increases + the ~50% increase the paper value of my property have far outstripped any increase in rental income.

      I admittedly can’t complain – I certainly voted for ST 3, Move Seattle, etc, and would do the same thing today.

    • Thanks, Eli. How do you figure that 50% increase in the value of your property into your business plan? That’s like free money, right? I assume you could either sell out now and take a huge profit or spread that windfall out over many years and still not feel the increase in cost of the slightly-improved-for-tenants environment with which Seattle landlords will soon be faced.

    • It’s not really free money, because it was really expensive to buy up an older building and bring it to good repair – easily $200K-$300K above the actual increase in home value resulting from those improvements.

      So actually, as an investor, I’m still below-water. There are no big home equity profits for me — but that may be different for people who bought a lot earlier, or were able to score a building that was already in great shape.

      I don’t mean to begrudge tenants their sense that these changes are a win for them. But I that even that remains to be seen over time (for the reasons Soo Valley discusses above).

    • Eli: Still, you didn’t earn that 50% increase in property value by fixing the place up; it’s a windfall due to a change in the market. Regardless of what you paid for the property and what you spent on fixing it up, the changing real estate market just handed you 50% of the property’s value for nothing. Does that figure into your business plan, or just amount to gravy you’ll see if and when you sell?

  8. As a 31 year owner/landlord of an 8 unit apartment building on capitol hill, the simple way around this law is to rent month to month which most landlords will start doing. and of course application fees and all other fees will be jacked up so landlords can protect their investment.

    Month to month leases will require full payment of damage/security deposit within 2 months.

    The tenant will lose and have no security of a long term lease, therefore landlord will be able to increase rent every 2 months if he so desires with no recourse from socialist/anarchist city.

    as a long term landlord who has great tenants, always been fair and believes in keeping rents lower than market value, my ways are soon to change. when the government start bullying the gloves will come out.

    seattle better wake up – you have a city council supporting underachievers.

    • Well, I wouldn’t.

      Just curious — you *really* would rather lose the deposit than risk being stuck with a vacant unit in the winter when rental applications are depressed?

  9. Phil Mocek: 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.

    Quite 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 30 years.

  10. Thank you Soo Valley and Gene Degeberg, right on! concise points… The City Council is creating a higher bar for renters to overcome. The very people they believe these new ordinances will help are sadly the ones Landlords will disqualify right of the gate. I, as a landlord have always gone by “gut feel” and a modest amount of background info when filling a vacancy. Not anymore I now will require a full blown credit background check and high 700 credit score along with stable work and resident history.

    • This is a basic supply and demand issue!! Econ 101! Come on City government pull your collective heads out!!! Put your pitiful punitive efforts against “landlords” and put them behind efforts to build more affordable housing. Form alliances with developers builders and investors to make something positive happen. If we can”t learn from the similar restrictive ordinances that have been in place in San Francisco for years, that haven’t worked then we are doomed! San Fran is the most expensive housing city in the US with a homeless problem as bad or worse than Seattle.

  11. As a landlord on Capitol hill I see the following scenario happening now that this new “no fee” law will be in effect:

    1. Landlord puts ad for apt on Craigslist.
    2. 60-80 people respond
    3. 10-15 of those people will mention to landlord that they are willing to pay deposit in full in hopes of being chosen for apt..
    4. Landlord happily rents to of of those qualified 15 who offer full payment of deposit.

    So the effect of the new “no fee” law will even more cut out those who can’t pay the deposit in full so the Landlord is protected.