Many times ordinances have consequences which impact those involved in different ways. The rent control “stabilization” ordinance, which is closer to passing, in Providence, RI, is a prime example. If and when it passes, there will be winners and losers, making some wonder if those involved truly examined its future impact.
It remains to be seen whether or not it would benefit renters in the long-run. While we can understand the politicians’ desire to try to keep rent increases to a minimum to encourage new residents, a limit of a 4% annual increase may not solve the problem. This result would tell landlords they can increase rents by 4% every year whether they planned to or not. The “everyone else is doing it” factor will kick in. As the below linked article indicates, 60% of Providence residents are renters. Did they think long-term?
Some tenants prefer renting. It may be to save a down payment, but some people prefer to not have to deal with maintenance and major repair costs. However, if they are considering renting and staying for five years, they would know (upon the ordinance taking effect) they will be paying 20% more rent in five years. It would be without any building improvements being necessary. The “win” may go to the landlords and real estate investors who would be able to factor in their rent increases over a five-year initial investment.
Meanwhile, the ordinance does not impact housing prices directly. The city takes up only 20.6 square miles. If rents continue to rise, people can look to nearby areas where there are not the same rent control restrictions.
From a real estate marketing standpoint, this is an opportunity for agents and brokers to form a strategy. They could start pointing out the upcoming rent increases for tenants and present being locked in with a mortgage. Agents and brokers that know to cultivate deals could create “rent to buy” scenarios, understanding that a gradual commission is better than not earning one.
The message here is to be aware of what is, or is not, going on within municipalities you work and/or invest in. Having a marketing strategy in place helps you to be “first in” on deals for you and your clients!