Residential Landlord And Tenant Ordinance (part II)

Another good landlord that I work with informed me that an ex-tenant is suing him for $26,000 because of clerical oversites like (allegedly) returning the security deposit 3 days late. Presumably they realize that they will not receive this amount and they are simply seeking to frighten the landlord into a settlement for $5,000 - $10,000.

Based on prior conversations I realize that all socialists and most "progressives" see no problem in a regulatory regimen that harshly punishes landlords for clerical oversites. And of course I have never heard them express concern that increases in the tax and regulatory burdens has made it increasingly less profitable to be a landlord. Implicit in their vision is the idea that the landlord-tenant relationship is a zero-sum-game in which every burden that a landlord faces is a benefit for tenants.

This vision is deeply flawed, because to a large degree the well being of tenants and landlords are intrinsically connected. And the increased burden that landlords face engenders negative, unintended consequences that are most felt by tenants. In other words, tenants and their so called advocates are shooting themselves in the foot with every anti-landlord ordinance that they pass. Here are a few of the negative effects:

1. The diminishing returns and the increase in liability that landlords face were two (of several) factors that encouraged so many landlords to convert their properties into condos, contributing to what many "progressives" refer to as a "shortage of affordable housing."

2. The race to beat rising operational costs (via higher taxes and regulatory expenses), encouraged landlords to rehab their rental units and (of course) increase rents, which also contributed to the "shortage of affordable housing."

3. The increasingly lengthy and costly eviction process that landlords face has naturally increased their credit requirements, which greatly limits the housing options that poor (and most minority) apartment seekers face. Or to put it simply: the harder it is for landlords to evict tenants, the harder it will be for tenants to rent apartments.

4. In the south and west side of Chicago there is now an abundance of extremely cheap, foreclosed homes. The rock bottom prices (single family homes that go for as low as $2,500) make it extremely tempting for investors to purchase and rent them out to local families. At that cost a rental property can simultaneously be "affordable" for tenants and profitable for landlords.

But, the increasing liabilities that landlords face via city ordinances has dissuaded many an investor from purchasing these homes. The end result is a decrease in the supply of well maintained rental homes for poor and working class families. And as any economist will tell you, when you lower the supply of a commodity, you increase its cost, i.e. "less affordable housing." And needless to say vacant homes do not breed economic and social stability, least of all in already marginal neighborhoods.