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A Middle Ground Solution for Landlords and Tenants

A letter from Action Alameda News publisher David Howard.

It puzzles me that tenant activists should push for private enterprise to subsidize housing through the support of rent controls, and “just cause termination” laws. Housing is a “very basic human right,” tenant activists argue, a “human service” fulfilling a vital societal need. Aren’t those just the sort of vital services we expect government to provide? Air traffic control, for example, is something so important that we entrust it only to the government. Public health services are another example. It’s no wonder that landlords push back when asked to subsidize this basic human right. They don’t see that there’s anything in it for them.

Indeed, the government today does play a role in providing housing, through public housing projects, and Section 8 housing vouchers. Again, I call on the City of Alameda to better market Section 8 to landlords, to induce more to participate, and I call on tenant activists to invest some of their energy in pressing for an expansion of Section 8 programs, the better to serve more people.

But what about “middle income” tenants you ask? Those that are feeling the pinch of rising market rents yet earn too much to qualify for Section 8 vouchers, even if the program was expanded. There is really no incentive for landlords to go along with rent control and the other government-intervention proposals I have heard to date. So I am proposing a solution that might provide incentive.

I suspect few people realize that landlords pay business taxes to the City of Alameda, based on their rental income. Some $217,000 in 2014, according to the City of Alameda. Further, 18 cents of every property tax dollar in Alameda County is redirected to cities. I’m sure many landlords would say they pay a lot of taxes.

I propose that the City of Alameda enacts an ordinance that would provide a tax rebate to landlords that stipulate a “just cause termination” addendum to their tenant lease agreements. Perhaps, to sweeten the deal, we make “just cause terminations” mutual – tenants have to have a good reason, like loss of a job, if they want to break a lease early, which costs landlords money. The City of Alameda can draft a standard addendum form, with standard language, that landlords must use, if they want the rebate. The annual business tax license return can be modified for landlords to include an exemption claim check box and require the landlord to provide a copy of the addendum signed by both landlord and tenant. Perhaps the addendum needs to be re-signed every year for the landlord to claim the exemption.

Savvy landlords would quickly learn that participating in the program provides a tax rebate, and gives them an edge in marketing their properties over landlords that don’t participate. Savvy tenants would quickly learn to work only with landlords that participate. There would be some administrative costs on the landlord side, but tying it to their annual business tax license return should minimize that.

Critics will no doubt balk at the prospect of providing tax rebates to landlords, but it’s actually a tenant subsidy, not a landlord subsidy. And besides, we already use public funds for public housing, Section 8 vouchers, and to build low-income housing. Anyone who believes that housing is a basic human right that society needs to fulfill would surely have no problem using public funds to motivate the desired behavior on the part of landlords.

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