Today we go into part four of our five part series on the new Tenant Protection Act.
Featuring:
Bob Nelson, Eugene real estate investment broker
Marcia Edwards, Eugene residential real estate broker
Marcia Edwards: We’re trying to get our heads around the Senate bill recently passed updating the Landlord Tenant Law in the state of Oregon. What do they call that?
Bob Nelson: Oh, it’s the Tenant Protection Act.
Marcia Edwards: Tenant Protection Act. Everyone calls it that?
Bob Nelson: That’s a pretty amazing thing. There were two components that dealt with how you would modify the no cause eviction to remove a tenant that is either a problem or in the event that the owner’s attempting to retake possession of the unit with the intention of moving a family member in and selling it and so forth.
The other side is the rent control side of it, that the amount of rent increase that can occur in a one-year period of time is limited to 7% plus the CPI. The CPI was fixed by the state of Oregon at the moment that that was engaged at 3.1%. In the event that you raised the rent more than 10.1%, that is forbidden and that would be a violation of the act.
Now it’s interesting because most landlords didn’t raise rents 10%. What has this done to protect the tenant? Everybody’s getting a 10% increase. Boom. It’ll occur again because rents are way behind for most people, or the market would dictate.
Marcia Edwards: Well, people would be relaxed about it, not feeling an urgency. Now they’re feeling an urgency as owners that they’ve got to maximize for a couple reasons, maximize the rent they can get every year because, at the time of sale, they’re going to have to show proof of it being a market rent property.
Bob Nelson: Yep. That is exactly correct. Income properties are valued in accordance with the amount of income that they generate. In the event that your rents are way behind because you’ve been either lazy or unaware of what the market is doing, or a being, quote, unquote, nice to your tenant, the problem then comes how do I catch up to a point where the property would be producing whatever is demanded or dictated from the market? Restated, I don’t have to sell at a discount.
Marcia Edwards: I know the upside of this is that some of these landlords are going to become sellers of small properties.
Bob Nelson: Yep. That’s exactly correct.
Marcia Edwards: There’s more leaving the rental pool. Rents are going up faster and there’s residents that are turning away from tenant occupancy. I don’t know if they got what they had intended to do with this.
Bob Nelson: It’s totally backfired.
Join Eugene, Oregon, real estate experts: Bob Nelson, Real Estate Investment Broker with Pacwest Real Estate Investments, and Marcia Edwards, Residential Real Estate Broker with Windermere Real Estate, daily at 5:30 on KPNW for the “Real Estate Today” radio show.
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