Portland has a new proposal to charge landlords exorbitant fees to tenants for a multitude of reasons. Landlords must pay tenants a relocation fee based on the number of bedrooms they are renting. This number ranges between $2900 and $4500. This fee will be applicable if the landlord chooses to evict the tenants for no cause, or if the landlord increases rent by more than 10% and the tenant chooses to move rather than pay the higher rent. The fee is intended to cover moving costs, and other expenses associated with involuntary displacement, which could add up to three month’s rent.
This ordinance is intended to assist tenants with the high cost burdens of renting in Portland right now. Rent in Portland has increased over 30% over the past five years, and it’s estimated that 52% of tenants in Portland are cost burdened (meaning they pay over 30% of their income in rent). In fact, on average Portland tenants pay closer to 45% of their income in rent. In theory the relocation fee will reduce involuntary displacement, and possibly reduce homelessness.
The relocation fee was created with the best of intentions, but there are some unintended consequences that are not being considered.
While this ordinance makes a lot of sense for large apartment complexes and companies, it could have a very negative impact on individuals renting out a single house or unit. Imagine if you chose to rent out your home for a year, and then discovered that if you wished to evict the tenants and move back into your home you would have to pay nearly $5000 in relocation fees? This will likely discourage individuals from renting out a property, and thus further reduce the rental inventory in Portland.
This ordinance is also not considering economic cycles. Right now, Portland is probably near the peak of a cycle, meaning the rent and prices will probably start reducing naturally eventually. If the relocation fee stays in effect, it will make it very hard for landlords to rent their properties out and market price in the future.
What do you think about the relocation fee? Let us know in the comments bellow!
Nick Krautter is the author of The Golden Handoff: How to Buy and Sell a Real Estate Agent’s Business which debuted number one on Amazon for mergers and acquisitions. His goal is to teach real estate agents how to grow their business and to help them later retire and benefit from their years of hard work. For the last decade Nick has been a Realtor in Portland, Oregon, where he leads a team and frequently serves as a real estate expert for the media.