The law of unintended consequences strikes again

 

I'm cynically amused at the indignant tone of this report from California (link found at Wirecutter's place).

A growing number of property owners and managers are hitting tenants with extra fees each month — a nickel-and-diming of people that the airlines, for one, have made a core aspect of their business model.

It’s been common for years for landlords to charge more for a parking space or having a pet.

The new fees being levied — which might run an additional $5 or $10 each — cover a wide range of once-gratis services, including trash pickup, pest control, use of a mailbox and routine maintenance requests.

. . .

... some [landlords] now charge fees for moving in and moving out. Some have fees for “lease administration” (whatever that is). One Minnesota landlord collects a $100 “January fee” on the first month of the year.

A January fee!

In suburban Phoenix, a number of buildings are instructing tenants to leave their garbage near the front door and then slapping them with a $30 monthly fee for someone to schlep the garbage to a dumpster.

There's more at the link.

In response, Divemedic (who owns rental property) pointed out that he'd predicted something like this some time ago.

The entire situation was created with the double whammy of the eviction moratorium and tax increases. In my area, you can add large increases to property insurance. Any business that has increased costs must recoup those costs by increasing prices. The government responded to that by enacting price controls (rent control). In places all over the nation, landlords are being told what they can charge for rent, even as the costs like property taxes, interest rates, and insurance continue to climb.

So landlords are responding in exactly the way that I predicted they would- they are looking for new revenue streams by charging for perks that used to be gratis.

. . .

This is a situation that was created entirely by government. Businesses respond in a rational way to price controls and increasing costs. Government officials and idiot liberals don’t seem to understand that.

Again, more at the link.

Divemedic is right, of course.  If you force landlords to allow tenants to stay rent-free because of the "pandemic", and restrict their right to evict non-paying tenants or those causing damage to their property, you're inflicting economic injury on those landlords.  Of course they're going to try to make up their costs any way they can!

There are two more aspects to the situation, however.  I know several individuals who rely on rental income to fund their day-to-day expenses and/or retirement.  Over the past few years, their income stream(s) has/have been devastated by such government decisions.  One or two have been literally unable to buy food to eat, or pay their own electricity bills, because their income has been so severely slashed - through no fault of their own, but by legislative or regulatory fiat.  Rent control is also a factor in some cases:  their expenses are rising steeply thanks to rampant inflation, supply chain issues and other elements, but they can't recover enough from their tenants to pay them, because they're not allowed to raise their rents in line with economic conditions.

Another aspect is the blatant abuse of their properties by some tenants.  This is apparently rampant in some areas.  Too many people living in a space not big enough for them;  illegal connections to utilities, sometimes from a neighboring rental unit, sometimes from a travel trailer parked next to the unit providing accommodation for transients, etc.;  pets brought into units where they're not allowed and/or the pet fee(s) are not being paid;  and so on.  To make matters worse, when municipal officials discover some of these abuses, they don't fine the tenants - they fine the landlords, who suddenly have to pay for problems that aren't their fault.

Put those factors together, and it's no wonder that many landlords are trying to recover their costs and stabilize their income by any means available to them.

I accept that corporate greed is probably pushing many such charges.  Now that big money is pouring into housing, the corporations that now own a large proportion of America's rental properties are trying to maximize their return on investment.  Just like airlines charging for anything and everything they can think of, and auto companies charging for features on vehicles that used to be free, corporate landlords are following their example and trying to make money every which way they can.  Smaller landlords are following the example of the corporate giants, because if the entire market is shifting in that direction, they're basically leaving money on the table if they don't do so.  That makes no business sense.

Nevertheless, when push comes to shove, if landlords are prevented from charging and/or receiving a fair rental for their properties, they're going to have to make up for it in some way.  They're not running a charity;  they're operating a business, no matter how big or how small a landlord may be in market terms.  If government interference in the market through over-regulation and chasing votes through demonizing entirely legitimate businesses prevents them doing that, they're either going to make up for the shortfall in their income through other means, or get out of the rental property market altogether.  That doesn't make them evil;  it makes them sound businessmen.  (Sure, there are bad landlords out there [New York City is notorious for them], but they don't dominate the market.  They can't, because if they did, the market would destroy itself.)

Demonize landlords, and they're going to respond.  Limit their ability to earn money from their properties, and they're going to look for alternative ways to do so.  Restrict what they can charge, and they'll charge for something else.  Welcome to the law of unintended consequences.

Peter