Runaway rents: The law is failing renters
Times are tough for renters. More than a third of American households rent their homes. Housing shortages along with rising mortgage rates mean many people have found themselves locked out of homeownership. At the same time, rents have skyrocketed around the country, and not just in expensive coastal cities. Renters in areas that have long been seen as affordable like the Sunbelt and Mountain West are also facing massive increases in housing costs. In Austin, rents are up 40 percent year-over-year. In Orlando, 30 percent. In Denver, 29 percent. In Phoenix, 25 percent. In Dallas, 24 percent. In Atlanta, 20 percent. If mortgage payments increased by those amounts, one can imagine waves of foreclosures, protests, and non-stop calls to congressional representatives. But existing homeowners aren’t seeing those same increases. Why do homeowners get so much more stability and protection than renters when it comes to housing costs?
While the causes of the affordable housing crisis have been examined elsewhere, what hasn’t been reckoned with is how these double-digit rent hikes reflect deliberate law and policy choices that leave renters behind. Our research has shown that renters and homeowners in the U.S. experience vastly different treatment under our legal system: homeowners benefit from laws and policies providing them with a significant degree of predictability in housing costs and stability, while tenants are left largely unprotected.
For example, mortgage law has been designed to make low-interest, long-term, fixed-rate mortgages widely available to middle-class Americans. After the overuse of adjustable-rate mortgages helped precipitate the 2008 financial crisis, lawmakers responded with a range of legal and policy reforms to further protect homeowners from predatory lending. And while homeowners may face rising property tax bills (as their property values increase), states have enacted numerous laws to provide homeowners with relief, such as homestead exemptions.
In contrast, the law has left renters largely unprotected from unaffordable and unpredictable increases in housing costs. The majority of states ban rent control and rent stabilization laws entirely, leaving tenants vulnerable to exorbitant and unaffordable housing cost increases. Renters, like homeowners, are consumers, yet state and federal consumer protection laws largely ignore renters. Furthermore, the shortage of multi-family rental housing is exacerbated by local control of zoning, which has led many localities to prohibit the construction of anything other than single-family homes. Some states even give homeowners effective veto power over new development.
Of course, some might argue that the inconsistent legal treatment of renters and homeowners is just a definitional difference: if you want stability and predictability in your housing costs, you should buy a home; if you prefer flexibility, you should be a renter. While there are some for whom the flexibility of renting may be worth the tradeoffs, many people are not renters by choice. For many, the cost of homeownership is simply out of reach. Renters have just 1/89th the wealth of homeowners. Further, the majority of Black and Latinx families are renters, due in large part to a long history of racist, structural barriers to homeownership.
At base, the difference in how the law treats tenants and homeowners exists in large part because decisionmakers have adopted laws and policies that tend to value the role of property as commodity and investment vehicle over its role as shelter. We believe it is high time to question and challenge this status quo. This is not to say investors in rental property should never be able to make a reasonable return on their investment or to raise rents with inflation or maintenance costs. But the legal system often allows investors to increase rents as much as the market will bear. Some states and localities have enacted laws addressing these concerns, such as rental registries, good-cause eviction laws, or rent stabilization ordinances. But these types of laws only exist in a handful of locations, leaving most renters in the U.S. exposed to unchecked rent increases and the loss of their home if they can’t afford to pay.
As we have argued elsewhere, a deep strain of anti-tenancy runs through our legal system. The current housing crisis is further exposing just how vulnerable renters are in a legal system that accords them a second-class status. The law already protects those who own their homes from being subject to unchecked market forces. It’s time for the law to better protect renters too.
Sarah Schindler is the Maxine Kurtz Faculty Research Scholar and Professor of Law at the University of Denver Sturm College of Law. Kellen Zale is the George Butler Research Professor and Associate Professor of Law at the University of Houston Law Center.