Speaking of Regulation
Mayor Fenty is temporarily suspending the rule requiring land-owners to get a business license to rent out their properties, in order to help accommodate folks for the inauguration. A question — why not suspend it permanently? It’s an extremely cumbersome procedure that’s costly to enforce and that limits the flexibility and affordability of the District housing stock. Many, many other places manage to get along just fine without this kind of restriction. And it’s not like the business license rule has prevented abusive landlords from doing all kinds of cruddy things to their tenants.
I understand the thinking behind the rule, but it completely ignores any kind of cost-benefit trade-off, and fails to consider whether other policies might be more effective. I think folks would be less dubious of regulation generally if we had fewer bad regulations.
November 21st, 2008 at 12:59 pm
And it’s not like the business license rule has prevented abusive landlords from doing all kinds of cruddy things to their tenants.
This strikes me as letting the perfect be the enemy of the good. Take the recent shakeup of the DC Housing Authority: more inspections are happening thanks to the revealed abuses, and they’re able to happen because we have a list of who’s renting properties. Makes it easier to ensure that landlords have liability insurance, makes it easier to ensure that he resulting income is taxed, provides a lever for the city government to stop a bad landlord’s rental activities that’s simpler than a criminal proceeding… it really doesn’t seem like such a bad idea to me.
With that said I have no idea what kind of forms and fees are involved. Certainly it seems reasonable to make sure the process is streamlined. Make it a form on a website! Make it unnecessary if you’re renting your place less than X times a year! But I don’t see a great argument for removing the licensure requirements entirely.
November 21st, 2008 at 1:00 pm
Dearest Tom, you simply must try to get one. Then we’ll talk.
November 21st, 2008 at 1:05 pm
Well, fair enough. Just because it’s poorly implemented doesn’t mean it’s a good idea to completely deregulate the process, though.
November 21st, 2008 at 1:06 pm
You also have to think about the benefits relative to the costs. I’m sure that we can list lots of reasons why it might be good to require such a license. Were it costless to impose such a requirement, then the decision to have it would be easy. But it isn’t. It costs landlords time and money. It costs the government time and money. It makes rental housing more expensive. It’s not enough to think of good reasons for doing something. We need to see net gains.
November 21st, 2008 at 1:27 pm
It sounds like it’s cost you a lot of time (and therefore money), and that sounds like a problem.
But it still seems reasonable to me that it cost *some* time and money. This isn’t really like Matt’s favored “licenses for hair braiders” example — if someone’s going to enter into a contract to provide housing to other parties, I think there’s a compelling case for making sure they’re qualified to do so, and to make sure the city’s ready to step in if something goes wrong.
If nothing else, consider the public health and liability arguments. Or are we going to take the libertarian information-maximization approach and say that the market will select against a rental property that gives its patrons bed bugs, or collapses on them, or traps them as its smoke-detector-less hallways are engulfed by an electrical fire? These all represent potential costs of a laissez faire approach. How often would such incidents occur? To what extent does regulation really prevent them or minimize their impact? I can’t say, but I think you’d have to examine those questions carefully before concluding that deregulation is appropriate.
Of course, this is all pretty doomy and/or gloomy. I don’t think that allowing folks to rent out their houses for the inauguration is going to result in the streets running red with blood. I don’t think it’s a great idea to officially sanction an amateur hotel industry, but I also don’t see a great reason for inconveniencing property owners more than they would be by, say, a trip to the DMV. It sounds like the process is currently much worse that that, and I hope that it can be fixed.
November 21st, 2008 at 1:44 pm
I just want to be clear on this point: is Ryan’s objection wholly to the form that this regulation takes - onerous yet not protective of tenants’ interests - or does he actually think that any property owner should be able to rent out any space for housing at any time with no say-so from the government?
November 21st, 2008 at 2:17 pm
My problem is this — we think to ourselves, well, we don’t want just anyone renting out a room, and so we establish certain requirements and assume everything is taken care of. This is not, in fact, how it works. What does happen is that a complicated and expensive licensing procedure grows up. Some benefit is realized, as new landlords install fire extinguishers. Many other issues are left unaddressed. And some people who might have had more affordable housing in the District are forced into more expensive or otherwise less desirable living quarters. And we don’t really do all that much to figure out whether, on net, things are better.
My opinion is that the District government is, in general, not a very good judge of what kinds of things are bad for tenants. If I get an inspector in, he’s going to go down his list and cite me for not having a bathroom fan (seriously), but he’s not going to check the electrical wiring, or see if the mattress has bedbugs, or see if there’s mold behind the baseboards, or do many of other potential safety checks he might potentially do to secure the safety of the tenant. What we basically have is a very expensive and faulty system to try and get fire extinguishers and smoke detectors into apartments.
In my opinion, there should be a short and simple list of regulations that landlords must follow, and to enforce those rules, there should be a very simple and robust system for tenant complaints and landlord fines. If everyone knows what the rules are, and if landlords know that a legitimate tenant complaint will get an inspector down there writing a $1000 fine the next day, then you’re going to get excellent compliance, without the time and money waste we currently have.
But that also means a slight shift of responsibility toward tenants and away from the government. I’m comfortable with that; I think it’s a marvelous idea. But that’s a hard step for many on the left to take.
November 21st, 2008 at 4:13 pm
If everyone knows what the rules are, and if landlords know that a legitimate tenant complaint will get an inspector down there writing a $1000 fine the next day, then you’re going to get excellent compliance, without the time and money waste we currently have.
But you won’t get fines like that - anywhere, ever. This is a private property-obsessed nation, and property owners who flagrantly break the law and ignore directives from legally-empowered authorities go scot-free all the time. The letter of the law can be clear as day, but if the judge decides to substitute his sense of the situation for the facts and the law, the property owner will skate.
Your solution, in other words, is a lot like the “remove all the loopholes” solution to fixing taxes. The interests with all the power love the loopholes, because they’re the ones who benefit. Sure, we could have a lower tax rate if you kill all the loopholes. But you don’t start by lowering the tax rate. You don’t start to fix unsafe rental conditions by throwing out what barriers exist to bad landlords.
November 22nd, 2008 at 10:52 am
And just to open up a related can of worms, so to speak, the zoning in Ward 3 for strict one family housing is a zoning law complied with more in the breach. You can get a sense of all the basement apts that are in houses from the ads for houses with ‘mother in law’ suites/spaces. Many of us are renting out a basement apt in order to help pay our mortgages. The main objection to changing this law is that there will be more cars on the streets. In fact in the close to 30 years that I have been renting my basement apt about 2 people have had cars. In addition I have off street parking and so this would not be an impact on my immediate neighborhood. So if there’s movement to reconsider rental laws I suggest that this zoning law for Ward 3 be reconsidered.