The Future of Rental Housing: More 2018 Regulations and Legislation

Written by Apartment Management Magazine on . Posted in Blog

By Becky Bower | ApplyConnect

2017 was undoubtedly a busy year for rental housing legislation. With bills like California’s immigrant housing protections and the City of Seattle’s ban on criminal records within background reports, you’ll start to feel the effects of these passed bills this year. Take a look at pending and future rental housing legislation that could affect properties across the U.S. in 2018, and be aware of legislative trends that surfaced last year. One prominent bill in one state could very easily turn up in another state down the road.

NATIONWIDE

IN EFFECT AND FUTURE: Tax Reform Bill (see enrolled bill text)

While some provisions within Congress’s and the Senate’s tax reform drafts were concerning for the rental housing industry (like the removal of private activity bonds within the low-income housing tax credit), the aforementioned provisions did not make it into the final, enrolled bill. The National Multifamily Housing Council and National Apartment Association have issued a joint statement applauding Congress for removing passages that restricted the growth of the multifamily industry. While it appears that this bill will not drastically impede the rental housing industry, we suggest you talk to your accountant about how this bill will affect your personal and rental property’s taxes in the coming year. Parts of the tax reform bill should take effect January, 1, 2018; however, other elements will not take effect until 2019 and beyond.

PENDING: Tenant Protection Act (S. 1758)

The Tenant Protection Act will amend the Fair Credit Reporting Act (FCRA) with further requirements for landlords and consumer reporting agencies (your tenant screening provider). The use of eviction records, or “housing court records”, will become more limited under this bill. Tenant screening providers will be prohibited from using eviction records (or any other court records pertaining to housing) in their resident screening report unless 1) the record resulted in a judgment of possession; 2) the decision of the court in the record’s case is not being appealed; and 3) the record is no more than 3 years old. Since being introduced on August 3, 2017, this bill has not made any progress. You can expect to hear more about this bill this year.

Presently, eviction records are allowed to date back up to 7 years, and may include both judgments and filings so as to inform properties about applicants who demonstrate a trend of poor residency.

PENDING: FCRA Liability Harmonization Act (H.R. 2359)

Introduced in the House on May 4, 2017, this bill aims to amend the civil liability requirements under the FCRA, specifically the requirements with class actions. As currently proposed, this act would prohibit courts from applying a minimum amount of damages for each member of the class, with fees (excluding attorney’s fees) not exceeding $500,000. Since its introduction to congress this bill has had hearings held by the Subcommittee on Financial Institutions and Consumer Credit on September 7, 2017. You can expect to hear more about this bill this year.

FUTURE: NFIP Reauthorization (H.R. 2874)

The National Flood Insurance Program (NFIP) enables rental property owners, operators, and developers to get flood insurance coverage through the Department of Homeland Security (FEMA). While this program was set to expire on December 22, 2017, the reauthorization is now extended to January 19, 2018. The House passed their own revision (21st Century Flood Reform Act, H.R. 2874) on November 14, 2017, however it seems that the Senate will be drafting their own NFIP reauthorization bill.

CALIFORNIA

IN EFFECT: Immigrant Tenant Protection Act (AB 291)

AB 291 goes into effect on January 1, 2018. This bill prohibits landlords and properties from disclosing the tenant’s immigration or citizenship status to any immigration authority, law enforcement agency, or local, state, or federal agency unless obligated under federal law, a subpoena, warrant or order issued by the court. You are also prohibited from making inquiries into the immigration or citizenship status of a rental applicant or tenant. This includes requiring to see Social Security numbers (or any other documents) after you’ve already approved the tenant for occupancy. Violators could pay up to $2,000 in damages for each violation.

Quick Tip: Make sure your online rental application does not specifically use the language asking if the applicant is a U.S. citizen.

IN EFFECT: Flood Hazzard Disclosure (AB 646)

On July 1st, 2018, landlords with “actual knowledge” that their property is in a flood-hazard area are required to add to their lease a flood risk disclosure. Owners with “actual knowledge” include those who are notified by a government agency and owners that are required to carry flood insurance.

IN EFFECT: Recreational Marijuana Legalization (Proposition 64)

Be aware that on January 1, 2018, the legal sale and taxation of recreational marijuana will go into effect. Recreational marijuana vendors with temporary licenses will become valid on the 1st. Property owners may prohibit the use of smoking marijuana and any other types of smoking on the property within the lease agreement, if they choose to do so.

IN EFFECT: Housing Accountability Act (AB 678 and Companion Bill, SB 167) and Other Affordable Housing Bills
Aiming to boost California’s housing supply, these bills financially penalize local governments that deny or conditionally approve housing projects in “a manner that renders infeasible”. Local governments will now have to follow legal mandates before denying housing projects that comply with the law’s general plan and zoning rules. Money gained through fines would be later used to construct affordable housing. This is effective January 1, 2018.

While the Housing Accountability Act is one of the more noteworthy bills aimed at alleviating the affordable housing crisis, be aware of the following affordable housing bills:

  • IN EFFECT: The Development of Micro-Apartments (AB 352)

This bill prohibits cities and counties from establishing a higher sq. ft. requirement than 150 sq. ft. and from limiting the number of efficiency units near public transit, car sharing vehicles, or UC and CSU college campuses.

  • IN EFFECT: Local Zoning Regulations Could Require Affordable Housing Units (AB 1505)

AB 1505 authorizes cities and/or counties to adopt ordinances that require that the development include a percentage be dedicated to affordable housing.

  • IN EFFECT: A Streamlined Local Development Process (SB 35)

SB 35 streamlines the development approval process state-wide by limiting local governments from imposing parking standards and other requirements on developments. It also places requirements as to the minimum amount of units the area must develop annually.

  • IN EFFECT: Workforce Housing Opportunity Zone (SB 540)

This bill streamlines the development process by requiring local governments to establish a housing plan with all the necessary environmental reviews and public engagement already done.

  • IN EFFECT: The Building Homes and Jobs Act (SB 2)

This bill adds a $75 fee to all real estate instrument, paper, or notices permitted by law (like mortgage refinances), which will be allotted to affordable housing. Fees will not exceed $225.

  • FUTUREVeterans and Affordable Housing Bond Act of 2018 (SB 3)

A $4 billion affordable housing bond will be on the ballot for voters on November 6, 2018. From the sale of these bonds, $3 billion will go to affordable housing programs; $1 billion will go to farm housing and veterans programs.

IN EFFECT AND FUTURE: Smoking Ban Ordinance in Redwood City

Effective on January 1, 2019 for all existing units and January 1, 2018 for all newly constructed units (after Jan. 1, 2018), Redwood City rental properties with more than two units are prohibited from allowing smoking inside the units and within all common areas.

PENDING: Uniform Tenant Relocation Fees Ordinance in Oakland City

The Oakland City Council will be voting on January 16, 2018 on the Uniform Tenant Relocation Fees Ordinance. If passed single-family, condo, and multifamily property owners who seek to move themselves or their family members into their rental property would be required to pay between $6,500 to $9,875 per unit (depending on size) in relocation fees to adversely affected tenants. An additional $2,500 is required if those displaced tenants are seniors, disabled, or are minors. Property owners with prior move-in agreements will be exempt and owners with short-term tenants will have reduced fees.

PENDING: Repeal of the Costa-Hawkins Act (AB 1506)

This bill would repeal the Costa-Hawkins Act, which currently prevents cities and counties throughout California from adopting restrictive rent control policies, such as: 1) regulating initial rates and rates established after a change in tenancy, 2) rent controls on newly constructed housing built after 1995, and 3) rent controls on single-family homes. While this bill hasn’t been touched since March 16, 2017, both Assemblymembers David Chiu (D-San Francisco) and Rob Bonta (D-Alameda) have announced that AB 1506 will likely be heard in committee on January 10, 2018.

Read our article to learn why we, and others in the multifamily industry, oppose this bill.

FUTURE: California Rent Control Initiatives

Alongside AB 1506, a ballot initiative to repeal the Costa-Hawkins Act (an act that prohibits local governments from regulating the price of rent) has been filed. The measure has not yet qualified to be put on the ballot on November 2018. Activists will have until June 28th, 2018 to collect valid voter signatures.

You should also be aware that tenant’s rights activists have made statements saying they are preparing to launch separate rent control initiatives (or these city councils are considering rent control ordinances) in the following cities: Burbank, Glendale, Inglewood, Long Beach, Pasadena, and Santa Cruz. Many of these activist groups have previously failed to get their provision accepted (either because they filed the petition incorrectly or there was an inadequate amount of signatures) in the fall of 2017, however, these groups are planning to refile again. Depending on how these tenant rights groups decide to qualify their initiatives (either with the random sample method or the full check method), the last day to file a petition is either April 24, 2018 or March 7, 2018.

2018’s Hot Item: Online Rent Collections

Written by Apartment Management Magazine on . Posted in Blog

by Becky Bower | ApplyConnect

Let’s face it – physically collecting rental checks is outdated. It requires you to invest a lot of time into recording the payment into your tenant ledger, and standing in line at the bank to deposit it. This process doesn’t even include enforcing late fees, bounced check fees or any time spent talking to a tenant that doesn’t have the rent. Bring your rent collections into the future by switching to a convenient, easy, and hassle-free online solution in 2018.

While you might be accustomed to your current rent collection process, there are a few benefits to having an online option that manual procedures don’t have.

The five benefits to providing online rent payments  are:

  1. Automatic Bank Transfers

Don’t dread the 1st of the month any longer. With an online rent collections solution, you won’t have to stand in that long line at the bank to deposit your rent checks. Your tenant’s rental payments will be automatically transferred into your bank account, allowing you to maintain rent collections during an emergency or that well-deserved long vacation.

  1. Tenant Notifications

If you have renters that are notoriously forgetful when it comes to paying the rent, then tenant notifications could be the solution for you. Many online rent collection services will send your tenants a text message and/or email reminder when a payment is coming up. Of course, once a payment is made, you’ll get a notification that the funds were received as well.

  1. Track Payments on Any Device

Manually inputting rental payments into a ledger (whether it’s a spreadsheet or physical ledger) is time consuming and tedious. Track your tenant’s rental payments online instead. This way you’ll be able to see payments that are pending, have been already made, and the total funds that you’ve received from your Dashboard. Each payment is timestamped, so you can easily determine if you need to charge late fees.

  1. Roommate Payments and AutoPay

Allowing your tenants to use multiple debit cards or checking accounts to pay the full rent balance will open up your door to new renter possibilities. Not only can it attract new applicants, but it can increase your relationships with your roommate-based households who will appreciate an easier way to split the rent (upping your chance of tenant retention). Roommate renters who are able to pay with their own bank account (versus frantically pooling the rental amount at the end of every month) are more likely to enable AutoPay – automatic monthly payments. Online rent collection features like these make it easier and more convenient for your renters to pay, and for you to get your rent.

  1. It’s Secure

The problem with physical rent checks is that they can very easily get lost or stolen. Someone could swipe your rent from your mailbox, office, or car. Far more likely, checks can get lost in the mail or somewhere on the way to the bank. With online rental payments, every payment undergoes bank-level encryption, eliminating the risk that your rent will get stolen. In addition to adhering to ACH security requirements, identity authentication is a common security practice among online rent collection services.

While some form of physical rent collections will always exist in the rental industry, online rental collections are not only a more convenient solution for you and your tenants, but it keeps your property competitive within the market. With the time saved from switching online, you can better focus on marketing your other properties, maintaining the rental property, and other vital day-to-day tasks. Plus, who wants to go to the bank every month?

Becky Headshot_Pro.jpgBecky Bower is a writer for the ApplyConnect® Blog and the communications executive at ApplyConnect®, a consumer initiated tenant screening company.  She has also spent several years in compliance and auditing.  Becky holds a degree in English with a focus in creative writing from CSU Channel Islands and is a published writer.

Pet-Friendly Rentals: Pros and Cons

Written by Apartment Management Magazine on . Posted in Blog

Shared post by  | Appfolio

Property managers have to make some hard choices when they decide to establish rules for their rental units. According to a helpful report from Michigan State Extension, deciding to allow or prohibit pets might be one of those tough decisions. Before deciding, it’s a good idea to carefully examine the pros and cons of running a pet-friendly rental property.

Pros and Cons of Pet-Friendly Rentals

Obviously, properties that allow pets can expect to attract a wider range of applicants. According to Michigan State Extension, pet owners may tend to be more responsible because they have assumed responsibility for a pet. In many ways, pet owners aren’t so different from parents. They may also tend to keep their leases longer, perhaps because they have fewer choices about where to live. It’s also important to be aware of the laws allowing service animals; it’s critical to remain compliant to avoid legal issues.

Drawbacks of Allowing Pets In

While it’s easy to agree that few people have anything against pet owners, it’s the pets themselves that may cause a problem. Property managers may have a few problems when they open their doors to lots of animals:

  • Dogs may bite, threaten, or annoy other residents. They could generate insurance claims and even cause some people to move out. Some renters may have serious allergies to pets as well.
  • Pets cause odors and make messes. If renters don’t clean up after their animals, the property may incur additional costs.
  • Insurance companies may raise premiums for some kinds of pets. Since some animals pose additional risks, insurers may charge property managers more for insurance.

Why Consider Having a Pet-Friendly Complex?

One thing that might offset some of the risks and costs of allowing in pets is the chance to earn more money. For instance, pet-friendly rental properties can increase revenues by charging extra fees or even non-refundable cleaning deposits to pet owners. It’s up to the property managers to make sure this extra revenue offsets extra cleaning or insurance costs. Also, by increasing the available pool of applicants, some properties may even be able to charge higher rents. At the least, it should be possible to increase occupancy rates in some properties that have been difficult to rent.

Steps to Take Before Opening a Property to Pets

First, property managers should check with their insurance companies to see if allowing pets will impact their premiums. Some insurers allow most breeds of dogs, cats, fish, and birds with a minimal or even no additional charge. Allowing pets doesn’t mean that the property has to allow all kinds of pets. Obviously, few property managers would be happy to see a renter move in with an adult chimp or six-foot python. However, it’s reasonable to consider allowing typical pets. It’s also a good idea to ask renters to purchase renters insurance to cover their own liability, keep dogs on leashes when they are outside, and so on.

In addition, it’s only sensible to consider adding an additional pet fee or deposit to the rent for cats or dogs. Also, it might be important to consider a provision in the lease that ensures that maintenance people can have access to the apartment to make repairs and not have to worry about a protective pet who wants to guard his property. Because of this, some properties limit the weight of dogs; but other properties only restrict certain breeds. Also, consider some reasonable limit for the number of pets allowed in each unit. Few properties allow more than one or two dogs or cats.

Finally, property owners might survey current renters to find out if they have strong objections to having pets as neighbors. If a renter does have an allergy or strong objection, it’s probably wise to consider that individual’s needs on a case-by-case basis.

Are Pet-Friendly Rentals Also Management-Friendly Rentals?

By completely barring pets, a rental property might also be barring an entire group of renters. Property managers might explore their options so that inviting pets into their property works out in their favor and doesn’t bother existing renters.

Will the Tax Reform Bill Be A Christmas Gift or a Lump of Coal for California Rental Property Owners?

Written by Apartment Management Magazine on . Posted in Blog

by Kenneth Ziskin, The Apartment Owners’ Estate Planning Attorney SM

Tax reform finally became law late in December, 2017, even though passage required it to give up its common name, the Tax Cut and Jobs Act (“TCJA”).

For most of you, the TCJA will give with one hand, and take away with the other.  For some, the act will be a lump of coal, and taxes will, unfortunately, go up.  For others, the act will be a real Christmas present that brings real tax savings.  You probably cannot just intuitively figure out whether you got a real present or a lump of coal until you model your situation, and possible planning opportunities.

Many of the law’s provisions were not finalized, or even discussed, in committee, and we will not understand the full impact for months, or maybe even years.  But, while all tax professionals (including me) are trying to get a handle around the impacts of the TCJA, I want to try to give you an idea of some of the major impacts and a few planning implications.

SANTA MONICA RENT CONTROL REPORT SHORT-TERM VACATION RENTALS/HOME SHARING ORDINANCE

Written by Apartment Management Magazine on . Posted in Blog

BY: ATTORNEY MICHAEL MILLMAN

Over the last several years, there has been a great deal of discussion and notoriety about people making their homes available for short-term vacation rentals and possible home sharing situations. Originally conceived in San Francisco, Airbnb became incredibly popular. First, visiting university professors would make their homes available for short-term rentals whlle they were on sabbaticals or traveling to another university as a “guest professor.” In time, these vacation rental platforms became more popular than conventional motels and hotels. Home away became even more popular.

Is Rent Control Coming to Pasadena? The Fight Begins Now!

Written by Apartment Management Magazine on . Posted in Blog

by Brian Gordon & Vincent Medina | Lotus Property Services

Is rent control coming to Pasadena? There is a new initiative that was just filed with the City of Pasadena City Clerk’s Office mid November. According to reports in the Pasadena News Now, a notice of intent to circulate a petition was signed by Pasadena housing activist Michelle C. White; Nicole Marie Hodgson, leader of the Pasadena Tenants Union; and 85-year-old Pasadena renter Robert Roberts.

Who? Me?

Written by Apartment Management Magazine on . Posted in Blog

by Jessica S. Weisman, Managing Partner of Client Education| Kimball, Tirey & St. John LLP

Many landlords often make the mistake of thinking that they do not need to worry about being up to date when it comes to fair housing law. “I’m an individual landlord” “I run a small operation” “I’m not a big fish” are common misconceptions. Regardless of property/company size, any landlord can find themselves on the wrong end of a fair housing claim and/or lawsuit.

The Top 6 Culprits of Holiday Property Fires

Written by Apartment Management Magazine on . Posted in Blog

Shared post by ApplyConnect

With wildfires burning throughout Southern California, it’s a good reminder to keep up fire safety standards this Holiday season. Although it’s unknown how the Ventura fire started, the negligent use of Christmas lights, lit candles and fireplaces, and greasy ovens have been known to be a tremendous safety hazard. During the holiday season a house fire is the last thing you need on your plate.

Create Nearly Instantaneous Connections with Residents and Prospects Using Instagram and Just a Few Keystrokes

Written by Apartment Management Magazine on . Posted in Blog

by Elaine Simpson | Occupancy Solutions, LLC

Forget about putting up signs or relying on word-of-mouth; social media is the modern way to make hundreds of people aware of, and learn about your products and services.  Up to 60% of apartment dwellers report that they found their rental through website listings and social media. 

PayRent.com