Earlier this year, the Biden administration released a white paper titled The White House Blueprint For A Renters Bill Of Rights. The 19-page document lays out a set of guiding principles designed to protect renters from exploitation and promote fair housing practices, specifically in the rental market. The document also imposes specific mandates on federal government entities such as the U.S. Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency (FHFA).
The FHFA is responsible for regulating the secondary housing market. The department's main responsibility is to supervise Fannie Mae and Freddie Mac, two government-sponsored enterprises (GSEs) that play a critical role in the housing market by purchasing mortgages from lenders. HUD is the federal agency responsible for implementing national housing policy and enforcing fair housing laws. It recently introduced Eviction Protection Grant Program (EPGP), an innovative federal initiative focused on facilitating legal assistance to low-income tenants facing eviction.
While these mandates address housing instability at the national level, the federal government is limited in what they can do at the local level. Rental property laws differ from state to state, meaning that the Biden administration can't force states to adopt any specific legislation regarding landlord/tenant interactions. However, the Renters Bill of Rights does encourage local municipalities to implement five core fair housing principles through their legislative measures.
In this article, we'll discuss the contents of the Renters Bill of Rights, how it can affect renters and landlords, and what it means for future real estate investment.
The Renters Bill of Rights is essentially a blueprint for tenant protections. The document is meant to provide a foundation for potential future policies at the local, state, and federal levels through five core principles:
While the Renters Bill of Rights doesn't directly address exorbitant rental prices, it does attempt to address the major issues contributing to the national housing crisis. By incorporating the Renters Bill of Rights into their local housing laws, states can help tenants obtain affordable housing, avoid unfair evictions, secure clear and fair leases, negotiate rental term agreements, and address health and safety hazards within their units.
The extent to which each state can protect its tenants depends on existing laws, local housing market conditions, and cultural norms. These measures will likely be easily adopted in places like New York City, Boston, and Los Angeles where housing legislation tends to favor renters. However, the Renters Bill of Rights will likely make a larger impact on places where renters don't have as many protections.
Implementing just one of the core principles could make all the difference for tenants in landlord-friendly states such as Florida, Texas, or Arizona. How much renters will benefit from the Renters Bill of Rights will ultimately depend on their local municipality willingness to provide eviction prevention and ensure housing quality.
You may be wondering, "Why does the Renters Bill of Rights matter if it's not signed into law?" After all, enforcing tenant protections isn't necessarily a requirement — at least not yet. But the truth is, property owners can also benefit from the terms laid out in the document.
The Renters Bill of Rights isn't just a legal guide, but also an essential tool for sustainable and ethical property management. Upholding tenant rights can help investors foster positive relationships with their tenants. This can lead to lower tenant turnover and stronger returns on your investment in the long run.
By committing to fair housing practices, you can enhance your reputation as a fair landlords and set yourself for success when multifamily housing policies are signed into law. Not only can investors strengthen their tenant-landlord relationships, but they can also avoid paying fines related to rental housing regulations in the near future.
By adopting the core principles outlined in the Renters Bill of Rights, investors are positioning themselves for compliance. Chances are some, if not all, of the suggestions made in the document, will stand as law at some point in the future.
Who would you rather be — the investor who prepared ahead of time, or the one scrambling to avoid penalties? To ensure compliance, take the following steps:
Adopting the Renters Bill of Rights could have major implications for the housing market at the local and federal levels. Real estate investors with residential rentals would likely be affected the most given the nature of their properties.
When local municipalities started passing short-term rental laws restricting how long investors could host, many investors decided to switch their real estate investment strategies by either converting their STRs into long-term rentals, mid-term rentals or, relocating their investment properties to another municipality with more lenient restrictions. We may see something similar happen as states begin to adopt this policy.
However, there's no need to walk away from rental properties just yet. Promoting fair housing laws and increasing housing affordability doesn't have to be bad for business. As long as you stay on top of rental housing legislation in your area and the new landlord responsibilities changing laws may bring about, you should be able to continue running a successful rental business.
The key here is to avoid unnecessary fines or legal repercussions as a result of non-compliance. These setbacks could significantly impact your overall profitability and force you to pivot your real estate investment strategy at a less-than-ideal time. Avoid being in this predicament by slowing implementing the core principles of the Renters Bill of Rights at your own pace — which will make it easier for yourself in the long run.