Bills in state legislature threaten to undermine housing market

Oct. 20, 2023  PLYMOUTH VOICE.

Plymouth Michigan News

OPINION

By:  Jarrett Skorup

Renter’s ‘Bill of Rights’ would spike Michigan housing costs in a way that would make things much worse for renters …

Michigan lawmakers are rightfully concerned about housing affordability. But a bill package floating around Lansing — referred to as the “Renter’s Bill of Rights” — would radically upend the state’s housing market in a way that would make things much worse for renters, particularly low-income residents.

The housing bill package being discussed, some of which has already been introduced, includes the following:

• Rent control
• Forbidding the use of criminal background checks or credit ratings as part of the rental application process (with some exceptions)
• Granting tenants taxpayer-funded legal representation and exposing landlords to more civil liability and lawsuits in a variety of ways
• Requiring landlords to accept the first “qualified” rental application (first come, first served)
• Mandating property owners allow tenants to make repairs and charge them for it
• Encouraging “tenants’ unions”
• Making it tougher for managers to evict tenants or raise rents
• Forcing landlords to pay a portion of the moving costs for some tenants
• Requiring people to get a state license before renting property to someone else

These policies would drastically increase the costs of owning and leasing rental property. The increased costs would get passed along to tenants in the form of higher rents. And this would specifically harm low-income residents — the very people lawmakers say they want to help.

It is harder for landlords to make a profit from renting to low-income tenants than to others. If the cost of renting out properties rises, landlords will pull their riskiest investments first — resulting in less affordable housing available for low-income families.

Rent control was popular a few decades ago, aided by the thought it would reduce costs for tenants. It has been thoroughly studied and widely discredited by economists and researchers. Capping rental rates limits the supply of housing and encourages blight, benefiting some existing renters at the expense of everyone else.

Most of the other policies proposed as part of the Renters’ Bill of Rights also would help the few at great expense to the many. Forcing landlords to pay more fees, ignore criminal backgrounds, accept “first come, first serve” applications and restrict their right to remove troublesome tenants adds tremendous risk and costs to the business of renting. These policies will encourage property owners to be much more selective in who they rent to because once they get a renter, they are stuck with that person (for good or bad). This gives property owners a strong incentive to build and manage only the least risky rental units, such as those serving wealthier clients.

Interestingly, the list does not include the most important thing lawmakers could do to boost affordable housing: reform zoning codes. Cities across Michigan have limited the supply of housing through zoning laws, making it more difficult and expensive to build homes, duplexes and apartments. Recent research suggests that Metro Detroit has the eighth strictest zoning of all major metropolitan areas in the country. Zoning rules like mandating minimal house and lot sizes, parking mandates, setback limits and especially banning multi-family homes drastically cuts the amount of housing available for people to rent or buy.

Boosting the supply of housing and competition among landlords and home sellers are the main ways to bring down housing costs, and zoning is a key way governments artificially restrict housing supply and competition. Not surprisingly, stricter zoning is associated with higher housing costs and more homelessness.

Gov. Gretchen Whitmer understands this. As she said when rolling out this year’s budget, “We just don’t have enough housing stock. We just don’t. … This has got to be a sustained effort to build up housing.”

Other states — both red and blue ones — are tackling zoning reform. California enacted several changes to its zoning laws, allowing more housing through apartments, duplexes, accessory dwellings and smaller houses. The state also prevents local governments from imposing certain regulations on housing complexes and puts some limits on zoning laws that require single-family homes. Montana made it much easier to build smaller starter homes, apartments and duplexes in cities. It also streamlined the permitting process by getting rid of unnecessary requirements and delays.

Legislators in Michigan have introduced dozens of bills this year that would impose new regulations and costs on landlords. But no legislator has proposed a significant zoning bill. Michigan residents can expect housing costs to continue to increase until that changes.

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Jarrett Skorup is the vice president for marketing and communications at the Mackinac Center for Public Policy. He has held various roles within the communications department, including senior director of marketing and communications and director of the Frank Beckmann Center for Journalism

The views and opinions expressed in this blog are those of the authors and do not necessarily reflect the official policy or position of the PLYMOUTH VOICE.

This article originally appeared in Bridge Michigan, Sept. 5, 2023.

Plymouth Voice.