Seattle caps move-in fees in response to affordable housing crisis

Seattle’s rental housing is simply too expensive, according to a recent survey of 300 residents. On a scale of 1 to 5, with 1 meaning “not affordable at all” and 5 meaning “easily affordable,” the majority of residents ranted Seattle’s housing a meager 1.54.

There’s no silver bullet approach to Seattle’s affordability crisis. Nonetheless, the Seattle City Council passed legislation in December that will hopefully offer renters some temporary reprieve.

The new ordinance caps the amount that landlords can charge for move-in fees and security deposits. Historically, landlords could charge fees equivalent to three or four months’ rent before a tenant could move in. Now, combined move-in fees cannot exceed the equivalent of the first month’s rent. The ordinance also forces landlords to accept these payments in installments, allowing tenants to pay gradually over a period of six months if they cannot afford the fees when they first sign the lease. Landlords are now also limited in how much they can charge for pet deposits: No more than 25% of one month’s rent.

Capping Move-In Fees to Make Housing More Affordable

The ordinance is intended to help renters like Michelle Dillon, who suffered through a series of rent increases because she could not afford the upfront costs for a new apartment. Eventually, Dillon was paying 70% of her monthly income on housing—more than double the 30% threshold above which housing is considered unaffordable. “I stayed through rent increase after rent increase,” Dillon explains. “It is not easy to move into a new place.”

Gwendolyn Jimerson of the Seattle Education Association testified that the new ordinance would also help local public school teachers, who are increasingly being pushed out of the city due to a lack of affordable housing.

“We cannot do the best for our students [when] educators here can’t afford to move or remain in the city of Seattle. We’re losing educators because we don’t have the capacity to maintain those who are paying extraordinary housing costs,” she says.

Despite pushback from local landlords, Councilmember Kashama Sawant, who sponsored the legislation, calls the new landlord-tenant policy “extremely mild” given the protections it will provide for local residents. She argues, “Landlords will still get their security deposit and last month’s rent, just a little later than they have gotten it in the past.”

Seattle Landlords Push Back

Seattle landlords disagree, arguing that the new ordinance is an overreach of local authority.

“I am offended by the city [telling] me that I cannot protect my own investment,” said Chuck Cady, a local landlord.

Lizbeth Lyles, another landlord, echoed that sentiment. “I’m feeling a little under attack by the city council. Putting all these restrictions on the landlords is not the solution. It’s just going to make us sell the properties.” This could lead to units being purchased, renovated, and re-listed for rent at even higher prices.

Other landlords warned City Councilors to prepare for the unanticipated consequences of the new ordinances. Landlords will simply shift to risk mitigation by increasing rents or increasing the tenant screening criteria to favor more financially stable residents.

Tenant Protections in Other Markets

Seattle isn’t the first city to adopt new legal protections for tenants in the wake of growing concerns over housing affordability.

Just last year, we highlighted an ordinance passed by the San Francisco City Council that made it harder for landlords to initiate no-fault evictions against educators employed by local schools and childcare centers. In September, a San Francisco Superior Court judge ruled that the ordinance was in conflict with state law, and the city had to revoke the policy.

Other cities have implemented new inclusionary zoning policies that require developers to reserve 20% of all new units for affordable housing.

Whether these policies will actually make a dent in the affordable housing crisis remains to be seen. If so, we suspect that other cities will follow suit by implementing new landlord-tenant policies of their own. It is important for landlords and property managers to monitor these proposals closely, weighing in at local hearings as appropriate.

Have rental increases led to new tenant protections in your community? If so, we’d love to learn more. Share the details of your community’s new regulations with us below.