Biden’s Rent Control Plan Gets Oklahoma Tenants’ Attention

John Doyle’s friends call him “Radar,” but he didn’t anticipate the scooter accident in April that knocked him to the ground, sent his hospital bills into the sky, sent him scrambling for help on a GoFundMe page and nearly got him evicted from his apartment for back rent that had already ballooned — yet again.

Doyle, 61, who lost his job as a DoorDash delivery driver after the accident, was lucky: Donations helped him get through the worst of it, and income from a new job as a night auditor at Champion Hotels helped him work with his landlord to dismiss an eviction lawsuit and get a new, one-year lease with increased rent.

But the ordeal has him, like many Oklahoma City-area renters, wondering whether and how President Joe Biden’s proposed cap on rent increases could ease the region’s worsening housing affordability crisis. The plan, if approved by Congress, would limit annual rent increases to 5% for “corporate landlords” — those with 50 or more units. Those who fail to comply would lose federal tax credits based on property depreciation.

Homeowners associations and industry groups have attacked the proposal. And with President Biden dropping out of the reelection race, it’s unclear whether the idea will gain any traction in Congress this year.

More: Evictions are on the rise in Oklahoma. Legal aid may be available to help

But housing advocates say rent increases, along with rising insurance costs and other inflationary factors, have led to a rise in eviction filings in the years since the pandemic. Eviction filings rose to 18,813 in 2022, after falling below 14,900 in the previous six years. They fell slightly last year to 17,868.

And while rents in Oklahoma City remain relatively affordable compared to many large cities, the city and state have few safeguards for renters. Online real estate company Redfin reported that at one point in 2022, in October, OKC had the fastest year-over-year rent growth, 31.7%, among the nation’s 50 largest cities.

Price Edwards & Co., which tracks Oklahoma City complexes of 50 or more units that would be affected by Biden’s rent cap, said rents rose 12% in 2021 and 6% in 2022. But outside of those two years, increases have averaged about 3.3% annually since 2016.

Oklahoma Tenants Face Drastic Rent Hikes

Doyle thinks Biden’s plan is a cool idea, but wonders “how you’re going to enforce it.”

Doyle has lived at Muntage Apartment Homes, 3041 NW 41, for 13 years. Rent increases have been moderate. When he renewed in April, rent went from $705 to $735 a month, a 4.3 percent increase. Last year, it went from $685 to $705 a month, a 2.9 percent increase.

Still, he’s concerned. Doyle said he’s heard of new leases for units his size at the 60-year-old Muntage Apartments recently going up to nearly $1,000 a month when they were renovated. Muntage, owned by Tulsa-based Vesta Capital, has been offering units Doyle’s size for much higher rents, but they’ve been renovated, according to the apartment complex’s website.

In addition, he worries that rents at the Residences at OAK, a new luxury condo development near his at 5001 N Pennsylvania Ave., will drive up the neighborhood’s market rent, which would drag him down with it. A one-bedroom at OAK, about the same size as his, at 673 square feet, is available for $1,737 a month, before bills — $1,002 more than Doyle pays.

The impact of Biden’s rent control plan in Oklahoma would not be large because, barring COVID-19-related increases, rents would not increase by more than 5% per year on average, said Greg Beben, staff attorney at Legal Aid Services of Oklahoma.

More: Inflation, Low Wages Put Pressure on Oklahomans, Here’s How Some People Are Coping

Beben said federal regulations prevent him from commenting on the merits of the proposed legislation, but overall, he believes Oklahoma law provides few protections for tenants and does not limit how much a landlord can raise rent after a lease expires.

Landlords “can raise rent as high as they want,” Beben said, and “evictions are quick, cheap and easy.”

Kelly Berger, board president of the nonprofit Oklahoma Coalition for Affordable Housing, says putting an annual rent cap on rent isn’t as simple a solution as it might seem.

“In addressing rent increases, balancing the need for affordable housing with the economic realities of rising wages, taxes, utilities and home insurance costs is key,” said Berger, who is director of family support at the homelessness nonprofit Positive Tomorrows. “Some properties are seeing home insurance increases of 20% or more.

“While we all support affordable rents, introducing a cap requires careful consideration of these complexities. It is a nuanced issue that requires thoughtful solutions.”

David Dirkschneider, a real estate broker, owner and affordable housing advocate from Oklahoma City, isn’t entirely convinced it’s worth it, though he strongly favors allowing the housing market to function without direct federal intervention.

OKC landlord, broker says Biden’s rent control plan won’t protect tenants

Dirkschneider, a broker with Capstone Cos. since 2020, said his six years of service on the board of the nonprofit Mental Health Association Oklahoma, including his current chairmanship of the housing committee, give him perspective on the issue from multiple perspectives.

He added that the association has nearly 2,000 units “dedicated to preserving affordable housing and preventing homelessness” and that it is the largest recipient of funding from the U.S. Department of Housing and Urban Development in Oklahoma.

“This is an issue that I feel very passionately about. As a landlord, I want to raise rents as much as possible. As a nonprofit, I want everyone to have affordable housing,” he said. “I can tell you, regardless of my personal or nonprofit perspective, limiting rent increases is counterproductive to what they want. They don’t understand that this proposal doesn’t protect tenants, which is their ultimate goal.”

In his opinion, introducing an upper limit on rents would restrict development.

“When you restrict development, you take units out of the market that would provide the resource that would naturally regulate rents. It’s a supply and demand issue,” Dirkschneider said. “When there’s more demand and you can supply, prices go up. Alternatively, when you allow the market to regulate itself, as in Oklahoma City, the development community will build as much housing as the market can support.”

He said the housing market in OKC is functioning.

“Rents will rise enough to justify new units while still providing a modest profit to the developer,” Dirkschneider said. “There’s a reason the markets with the most rent control also have the worst affordability problems. They discourage investment in those rental markets, which results in fewer rental units available.

“If restrictions were lifted in Los Angeles, San Francisco or New York, there would be an increase in housing construction. As inventory increases, there are more options. Again, supply and demand, prices regulate themselves.”

Rent control discourages property maintenance and improvements, OKC brokerage says

Rent controls not only make housing less affordable and therefore more expensive, but they also discourage landlords from keeping their properties in good condition, said Jim Parrack, senior vice president at Price Edwards & Co.

“Artificial rent controls make multifamily buildings less attractive investments and give multifamily owners less incentive to properly maintain their properties,” he said. “The result is fewer units being built and the existing units are in worse condition, which negatively impacts the tenants that these programs are designed to help.

“The simple answer to the complicated question of making housing affordable is to adopt programs that will build more housing, and the biggest one would be to relax regulations.”

He added that OKC’s pandemic-related rent increases were an anomaly in a market that typically sees annual increases of about 2.5% to 3.5%.

“It looks like the market has returned to historic levels. And while the 5% cap would impact our market less than high-growth markets, it’s important to remember that (averages) are averages, and the cap would be exceeded by any number of individual properties on a regular basis,” Parrack said.

Landlord: ‘There should be some kind of checks and balances’

As a landlord who works for the company, Jeremy Spring understands that — the need for people to be able to afford to live, and the need for landlords to make a profit. But he wonders how much is too much. Landlords “are rich,” he said.

In four years, he said, rent for the apartment he shares with his wife, Katie, at Mission Point Apartments in Moore, owned by Case & Associates in Tulsa, has gone from $950 to $1,450, a 53 percent increase. He said inflation is clouding the picture. By comparison, inflation has risen an average of about 5 percent over the past four years.

“It really makes it easier to justify because everything has gone up,” said Spring, 45, who works at Mattress Firm. His wife is a hairdresser.

He added that he knows that apartment pools, landscaping and other amenities cost money.

“But it would be very difficult for the average consumer to know” when and by how much rent could be fairly raised, he said. “If the world continues in this direction, there will always be people renting. There should be some checks and balances on everything.”

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Senior Business writer Richard Mize has covered housing, construction, commercial real estate and related topics for the newspaper and Oklahoman.com since 1999. Contact him at [email protected]. Sign up for his weekly newsletter, Real Estate with Richard Mize. You can support the work of Richard and his colleagues by purchasing a digital subscription to The Oklahoman. Right now, you can get 6 months of subscriber-only access for $1.