Landlords lament: Council caps move-in costs for Seattle renters

With vocal support from housing activists and over the objections of landlords, the Seattle City Council on Monday unanimously approved strict measures to limit the move-in costs for prospective renters.

Under the new ordinance: A renter’s initial move-in costs will be capped at the first full month’s rent along with a partial payment of any additional fees; security deposits would be limited to a maximum equal to one month’s rent; and landlords will be required to offer a six-month plan that allows renters to pay installments on additional move-in fees, the security deposit, and last month’s rent.

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The change in regulation, council members said, is an attempt to reduce the initial cost barrier for lower-income residents seeking rental units while still giving landlords financial security in an increasingly expensive city.

“I view this legislation as fair to all parties and we’re justified in supporting it — even if we didn’t have a housing crisis,” council member Tim Burgess said.

The legislation will take effect 30 days after Mayor Ed Murray signs it.

Under existing law, for example, an apartment that currently costs $2,000 monthly, including a $2,000 security deposit and $2,000 for the final month’s rent, might require a renter to provide $6,000 at move-in. Under the changed housing ordinance, the first month’s $2,000 could still be required up front along with one one-sixth of the additional costs, or approximately $660. The additional $3,340 balance would be split into payments over the next five months.

Gwendolyn Jimerson, who works with the Head Start program at Martin Luther King Jr. High School, said the changes won’t just affect renters pocketbooks; the changes will help public schools by allowing both children from low-income families and their teachers to remain in Seattle.

“We cannot do the best for our students when we have our students moving in and out of our city each and every year,” Jimerson said. “Educators here can’t afford to move or remain in the city of Seattle. We’re losing educators because we don’t have the capacity to maintain those who are paying extraordinary housing costs.”

Landlords have a different view

But while housing advocates hailed the legislation as a step toward a fair housing market, the Rental Housing Association of Washington took a much dimmer view. Sean Martin, the association’s external affairs director, said the restrictions reduce private property rights, increase the financial exposure of landlords and, as a result, will have the opposite of the intended effect — repressing the rental market, not expanding it.

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“What you’re going to see is owners shift to risk mitigation,” Martin said, “which is either increasing the rent or increasing the screening criteria to a higher standard to ensure that the person who qualifies to get in the door is someone that is going to be very responsible.”

In other words, he said, small landlords — those with one or a handful of units — historically have offset the financial risk of renting to a person with a marginal financial history by requiring more money up front. This change will just make that same landlord not even consider that same person.

William Shadbolt, a landlord with 12 Seattle-based units, agreed. Shadbolt attended the raucous council meeting Monday afternoon. He said the change will simply worsen the Seattle housing crisis in two ways. First, capping the security deposit and requiring less money up front will simply make landlords unwilling to take a risks on renters with marginal finances, such as Section 8 subsidized renters.

And second?

“The fact is that the small landlord gets screwed again,” said Shadbolt, who owns 12 units in Seattle and Renton with rents that range from $900 to $1,600 monthly.

The council did exempt for one specific subset of landlords — those that live in the same residence as the one they are renting. The exemption to the new caps is largely geared toward landlords who are renting a room in their own house.

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