Creative Accounting

A blog post from WIrecutter over at Knuckledraggin My Life Away brings us a story about how California landlords are charging fees for parking spots, trash pickup, pest control, use of a mailbox and routine maintenance requests everything they can think of. This is the only sensible response that landlords (or any business) has when a government has inflationary policies coupled with price controls.

The entire situation was created with the double whammy of the eviction moratorium and tax increases. In my area, you can add large increases to property insurance. Any business that has increased costs must recoup those costs by increasing prices. The government responded to that by enacting price controls (rent control). In places all over the nation, landlords are being told what they can charge for rent, even as the costs like property taxes, interest rates, and insurance continue to climb.

So landlords are responding in exactly the way that I predicted they would- they are looking for new revenue streams by charging for perks that used to be gratis. Here is what I said on the matter nearly two years ago when communities in Florida were talking about rent control:

If rent control is enacted, there are steps I can take: Each year, I will raise rents by the highest permitted under the new law. On top of that:

– I will no longer provide lawn service as a part of rent. That will shift $900 a year of expense to the tenant.
– I will no longer provide a free washer and dryer. I will recommend a company that will rent the tenant one at an additional cost, if they don’t have one. That company will be owned by me. The going rate for that is $144 a month.
– I currently pressure wash the outside of the property twice a year. I can push that off to the tenant, and make it their responsibility as a part of cleaning.
There are many ways that I can maintain profitability. Just taking the three steps above will have the effect of increasing the cost of renting by 15 percent without increasing the rent itself.

Landlords will have to be creative.

The list is endless. I can have parking stickers made, and I can charge you $15 per month for each sticker. Any car parked on the property had better have a sticker, or there will be a $50 fee charged per day for not having a sticker. If the fee isn’t paid, cars without stickers will be towed. I’m not a jerk, though. Parking in the garage will still be included in the rent.

I offer my tenants a lot of free perks- washer and dryer, lawn and pest control, all included in rent. Many landlords offer similar perks. Some rent furnished homes and include the furniture in the rent. I can see rent for furniture being an extra fee. Perhaps extra fees for things like a refrigerator, a stove, or a dishwasher. Florida law requires rental properties to have functional heating, but not air conditioning. There can be extra fees charged for use of the air conditioner.

This is a situation that was created entirely by government. Businesses respond in a rational way to price controls and increasing costs. Government officials and idiot liberals don’t seem to understand that.