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Is residential rental property a home or an investment?

On Behalf of | Apr 18, 2019 | Real Estate Investment |

That burning question is being asked by legislators looking for a solution for low-income renters and landlords wanting to stay in business.

Two words exist in the English language that rental property owners, both large and small, never want to hear:

Rent control.

Investors and landlords breathed a statewide sigh of relief in 1981 when Colorado banned rent control. However, the recent introduction of Senate Bill 19-225, better known as “Authorize Local Governments To Stabilize Rent,” could put that forbidden phrase into action.

Supporters of the bill see it as a much-needed bailout for lower-wage workers dealing with the continuing cost-of-living increases. They claim that many renters are forced to make difficult choices between paying high monthly rents or purchasing food and other necessities.

Colorado State Senator Julie Gonzales introduced the legislation, perhaps inspired by Oregon’s rent control measure signed into law this past February. The Beaver State now limits rent increases to no more than seven percent plus inflation. Additionally, those increases can only occur on an annual basis.

Enactment of the bill would overturn the 1981 law and provide local governments with authority to implement their own rent-stabilization rules.

Opponents claim that tenants struggling to make ends meet could see that control go out of control. With caps placed on rent that represents revenue streams for owners, ongoing maintenance and repairs could slow to a crawl to counter the financial losses. Smaller landlords who cannot survive under the limitations could either sell or get out from under the constraints by changing to condos or redeveloping the property.

Fewer properties would mean fewer competitors. That would push rent up higher, making it less than affordable housing.

With all investments come risks through changes in the economy or restrictive legislation. A skilled real estate attorney can help attend to the quick details while focusing on long-term stability and success.