Portland Tenant Laws add Complexity for Investment Owners

A few weeks back, we shared information about Oregon’s new statewide rent control laws. Ratified by the state legislature late last year, the new regulations place a cap on annual rent increases. They also ban no-cause evictions — with a few specific exceptions. While these new laws will have a significant impact on property owners throughout the state, Oregon’s rent control laws come on the heels of a series of tenant protection laws the Portland City Council passed in 2018 and 2019. Taken together, these legislative moves add a layer of complexity for Portland investment property owners.

New Tenant Screening Regulations

In June of 2019, the Portland City Council passed the “Fair Access in Renting” ordinance, which included a series of sweeping changes that affect how landlords can screen potential new tenants.

The main points of the ordinance include:

• First-come, first-served regulations: Under the new provisions, landlords must provide 72 hours’ notice before accepting rental applications. Then, they must use a first-come-first-served application process. Tenants with disabilities also get priority for accessible units.
• Applicant identification: According to the new ordinance, applicants don’t have to provide proof-of-citizenship or a government-issued ID, so long as they can provide other forms of ID that can reasonably confirm the applicant’s identity.
• Income-to-rent ratio: Landlords now can require income that is 2.5x a tenant’s monthly rent for units that qualify as affordable under HUD rules for people making 80% of Portland’s median family income. For units with monthly rents above the affordability threshold, landlords can require a 2x monthly income.
• Criminal background checks: The new ordinance encourages landlords to use a standard background screening. Under this standard, tenants with felony convictions more than seven years old or misdemeanor convictions more than three years old wouldn’t be denied. If landlords choose to use a more stringent screening process, they must give applicants an individual assessment and a chance to file an appeal.
• Credit history: Landlords can’t reject applicants for a credit score of 500 or higher.
• Screening limitations: Landlords can only conduct financial screenings on the person applying for a unit. However, other occupants are still subject to a criminal background check.

These new Portland tenant laws include a few exemptions. Owner-occupied duplexes, ADUs, and units not advertised to the public don’t qualify under these regulations. Also, landlords working with nonprofits to house low-income or vulnerable tenants are exempt. For all other investment property owners, the new ordinance goes into effect on March 1st.

Relocation Assistance Now Mandatory

These new screening regulations come in addition to another landlord/tenant ordinance the Portland City Council passed in March of 2018. Under this rule, landlords must provide tenants with relocation assistance under certain circumstances. This mandatory renter relocation assistance applies to:

• No-cause evictions.
• A qualified landlord reason for termination.
• A rent increase of 10% or higher over a 12-month period.
• A substantial change in the lease items.
• The renter receives no option to renew their lease.

Tenants must receive written notice for any of these events at least 90 days before the effective date. Relocation payments range between $2,900 – $4,500, depending on the size of the rental unit. The council did carve out a few limited exemptions. However, most Portland investment property owners must now follow this new ordinance. Landlords that fail to comply with these regulations could be liable to the tenant for damages, attorneys fees, and other costs. [Update: In response to the Coronavirus pandemic, Portland Mayor Ted Wheeler declared that any rent increases through 2021 would trigger a relocation assistance payment.] 

Additional Fees for Rental Owners

The Portland City Council capped off their busy legislative year by passing a $60 annual registration fee on all Portland-area rental units. They hope this new fee will generate $3 million each year to fund the city’s Rental Services Office, which helps answer questions about local housing laws from renters, tenants, and people within the government. The fee will also help fund a rental registration program that will track data related to Portland’s changing rental market. Critics claim the fee is regressive — because it applies equally to units regardless of their value — and expensive when compared to similar programs in other cities.

How Do Owners Manage All these New Laws?

All these new regulations could be very intimidating for the average investment property owner. After all, nobody wants to run afoul of Portland tenant laws. Especially if you only own a small number of units. However, these new laws shouldn’t keep you from renting out your home. Owning an investment property is still a fantastic way to build wealth and create passive income. You just need the right partner at your side. That’s where Rent Portland Homes by Darla Andrew comes in.

We’re a full-service property management company helping owners manage their investment properties in the Portland metro area. We handle every aspect of the management process, including marketing, tenant screening, rent collection, maintenance, and more. If you’d like to learn more about how we can help you be successful in the Portland rental market, contact us today. You can call Darla directly at (503) 515-3170 or fill out the contact page on our website, and we’ll get back to you ASAP.