Opinion: Runaway rents: Why 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 and not just in expensive coastal cities.
Renters in areas long seen as affordable are also facing massive increases in housing costs. In Austin, rents are up 40% year-over-year. In Orlando, 30%. In Denver, 29%. In Dallas, 24%. If mortgage payments increased by those amounts, one can imagine waves of foreclosures, protests, and non-stop calls to congressional representatives. But 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 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 makes 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 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), numerous laws exist 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—including Texas—ban rent control and rent stabilization laws entirely. 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, with many localities prohibiting construction of anything other than single-family homes. States like Texas even give homeowners effective veto power over new development.
Some might argue that the inconsistent legal treatment of renters and homeowners is just a definitional difference: if you want stability and predictability in housing costs, buy a home; if you prefer flexibility, rent. 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 history of racist, structural barriers to homeownership.
At base, the difference in how the law treats tenants and homeowners exists because decisionmakers tend to value the role of property as commodity and investment vehicle over its role as shelter. It is time to question this status quo. This is not to say investors in rental property shouldn’t be able to make a reasonable return on their investment. But the legal system often allows rents to increase as much as the market will bear, while leaving most renters in the U.S. with no legal protections from unchecked rent hikes and loss of their home if they can’t afford to pay.
As we have argued elsewhere, a deep strain of anti-tenancy runs through U.S. law. 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 homeowners from unchecked market forces. It’s time for the law to better protect renters too.
Schindler is the Maxine Kurtz Faculty Research Scholar and professor of law at the University of Denver Sturm College of Law. Zale is the George Butler Research Professor and associate professor of law at the University of Houston Law Center. A longer version of this commentary appeared in The Hill.
This article originally appeared on Austin American-Statesman: Opinion: Runaway rents: Why the law is failing renters
