By Kara Rafferty, National Account Manager at Brook Furniture Rental
Rental rates rise and fall. And sometimes they rise exponentially—like the market in Tampa seeing a 24 percent jump in 2021, the highest in the nation. The cause? Demand versus supply. When there’s low inventory, it creates a vortex of skyrocketing rents. Advocates for tenants will look to end the sharp, often unexpected increases by enacting rent control. The pandemic-prompted eviction moratorium fueled this heated debate, as renters face an affordability crisis in its wake. Ultimately, it’s a dance between legislation and inventory.
What is rent control?
Rent control, also known as rent stabilization or rent freeze, is a law that sets a maximum—or “rent ceiling”—on what an owner may charge residents. California, Oregon, the District of Columbia, Maine, Maryland, Minnesota, New York, and New Jersey have rent control policies in place at the state or local level. Taxpayer dollars fund a local rent board to administer and regulate, if enacted. Duties include determining the amount and frequency of increases, and special assessments for above-average increases.
Rent Control and Property Management Companies
Rent control is a hot topic in suburban and urban areas alike, so having an understanding of the concept, as well as the implications for inventory and future development projects, is a must for management companies, investors, and corporations. These entities monitor legislation to understand the future value of their investments. Some factors could include capital improvement projects, existing unit upgrades, and future renewal ceilings.
What is Good Cause Eviction?
In 2019, New York lawmakers presented Good Cause Eviction, prohibiting owners from evicting residents in any apartment, including market-rate, without demonstrating “good cause.” Examples of good cause are nonpayment of rent, nuisance, or taking back personal possession of the property. This limits the ability for nonrenewal at the end of the lease period, essentially creating a lease in perpetuity. In addition, it would limit owners from raising rent higher than 3 percent, or 150 percent of the consumer price index, whichever is greater. It currently sits at around 8 percent.
How do rent control and eviction restrictions affect corporate housing, relocation, and mobility partners?
When rent restrictions are present, ownership is more likely to leave a unit vacant or renovate it into a larger size where the upgrades will constitute a higher rent. In addition, construction costs are at an all-time high, water and utility bills are on the rise, and other environmental factors make some resistant to building anew.
Now imagine if management companies and developers do not build or maintain units online. With the added pressure to deliver an additional 4.3 million apartments by 2035, the demand would leave few options.
3 Ways PMCs Can Generate Additional Revenue
Organizations have turned to less traditional revenue sources and vendor partnerships to drive unrestricted revenue streams.
Furnished apartments
Self-managed or contracted through a third party, Brooks’ clients find high net operating income (NOI) on these furnished units with little maintenance. In addition, housekeeping services and amenities like spas, pools, and fitness centers are creating a personalized experience for the growing population of a hybrid workforce.
Guest suites
When your residents don't have room to host guests comfortably, this is a great solution, while also providing a new revenue stream. Good promotions, photos, and partners will make this addition a breeze. Also, a guest suite can double as a model when not in use.
Parking lot perks
Whether you install an electric charging station for sustainability benefits or an extra income boost (or both!), this amenity is becoming more and more popular. On top of your guest suites, parking for guests or premium parking is considered a common practice in urban cities.
Bottom Line
The legislative landscape poses challenges for corporate and relocation providers alike. If owners remove units from active inventory or stop building, supply turns scarce. Look for alternative revenue sources that complement your target goals and providers to support them. This is a critical strategy you can’t postpone.
To learn more about demand by region and regulation insight, visit:
- National Multifamily Housing Council — Rent Control Laws By State
- National Apartment Association — Rent Regulation: Policy Issue
- WeAreApartments.org
What Brook Can Do For You
We're here to help boost your bottom line with furnished units and guest suite accommodations. With Brook, you can ensure a seamless transition for everyone involved. Furnished apartments—decked out with all the furniture, décor, and housewares a family might need—can provide relocating employees with peace of mind, and free them up from the stress and unpredictability of shipping their life from one place to another. Plus, our new-and-improved technology platform makes offering complete furniture packages easier than ever.
Our self-service capabilities allow you to fulfill an important need in a way that’s both sustainable and budget-friendly, for you and your clients. Brook’s co-branded landing page gives your employees or renters the freedom to furnish on their own terms. No involvement needed by your on-site teams. In return, we share some of the revenue with your company.
As budgets tighten, Brook can help you provide peace of mind to your employees, and reap financial returns in the process.
