Introduction
Oregon Rental Laws have changed in recent years, making renters and homeowners subject to new laws and rules. As such, it is helpful to be informed of new regulations.
Rental Market Overview
It’s 2020 and the rental market, on the whole, is softer than it was 3-5 years ago. Within the last 2 years specifically, there has been a surge in inventory and much greater apartment availability. But building has slowed recently, most likely due to inclusionary zoning and the high fees attributed to new construction. This could lead to a shortage in properties in 2-3 years’ time.
This uncertainty is due largely in part to Inclusionary zoning. According to the Portland.gov website, the city of Portland has “identified the need for a minimum of 23,000 additional housing units to serve low and moderate-income households. The Inclusionary Housing program is designed to help meet this need, working to preserve economically diverse neighborhoods and housing affordability.” Due to this demand, and in addition to others seeking housing, there may be steep competition in terms of inventory.
Relocation Fees
The City of Portland recently issued another law that directly addresses relocation fees. It states that if someone owns a home and is leasing it out, even if the lease is ending soon, and the owner warns the tenant, the property owner is still required by law to pay relocation fee that could range anywhere from $2900 to $4500 depending on the number of bedrooms. This is a big deal since a lot of renting homeowners don’t have high profit margins on their rentals, sometimes putting them in a bind financially.
Rent Control Laws
Oregon passed a new state-wide rent control law that limits the amount homeowners can raise rents. As it stands right now, rent can only be raised once per year and at a maximum of 5.5% statewide and 9.9% in Portland. This law was introduced to protect renters, but it’s putting fear in some homeowners who rent out their properties, which is causing them to increase their rates.
Raising House Prices
As Portland continues to grow both in physical size and population, housing prices have also increased. What was once a reliable source of income for homeowners is now becoming less and less certain. For example, if a homeowner has a $500k house with a monthly mortgage of $2,700, renting it at that price is unlikely to be successful due to the number and variety of affordable apartments on the market. This points to a general shift in fewer homes being rented and instead, more apartment rentals. As a result, owning a rental property is not as profitable as it once was.
The Good News
There is some silver lining in the midst of all of this. Rent prices have leveled off and are not experiencing the increases they once were. As 2020 begins, Portland still boasts a strong housing inventory, with new developments on the horizon. And as a final glimmer of hope, Portland remains the most affordable major city on the west coast.
Sources:
https://beta.portland.gov/inclusionary-housing/inclusionary-housing-comprehensive-guide
https://www.oregonlive.com/business/2019/03/how-does-oregons-first-in-the-nation-rent-control-law-work-a-quick-guide.html