Analysis: Why Rent Control Isn't An Option for Austin

With the due date for April rents now long gone, we’re only just beginning to see how the COVID-19 pandemic and widespread quarantine measures are starting to affect property owners and the larger real estate market. Data from the National Multifamily Housing Council show that 69 percent of rental households nationally had paid their rent by April 5, a 12 percent decrease in on-time payments from the month prior and a 13 percent increase from April 2019.

We’re all still waiting for the data specific to the Austin market to tell us how many tenants were late or only paid part of their April rent. With some economists estimating that 25 percent of the city’s workers have lost their job in the past month, it could be a lot.

Renter advocates have already sounded a call for relief but one approach we’re not likely to hear talked about in any serious way at the local level is rent control, or the city intervening to reduce the amount of rent owed by tenants who fall behind.

The simplest reason why those tenants can’t look to the city for rent reductions is that Austin has no legal basis for stepping in to alter the terms of private contracts or lease agreements between a renter and a property owner. Texas is already a pro-property rights state where rent control – or limits on annual rent increases – isn’t constitutionally allowed, which is why you’ll never see that tactic brought up as a possible solution to the city’s affordability issue.

During a recent City Council meeting Mayor Steve Adler directly said the city is “not in a position to be able to forgive or excuse people from paying rent.” Those comments came during discussion ahead of a vote where renters were given a 60-day grace period on overdue rent before landlords could begin an eviction process.

Council Member Greg Casar has also acknowledged that the city is limited in the actions it can take when it comes to how much will be owed to landlords as months of rent and potential late fees pile up in the near term.

Without rent relief as an option to help renters, City Council has decided financial assistance from the city including rental vouchers and direct cash payments is the best move. Council recently approved drawing on $15 million in budget reserves to provide aid to residents facing job loss and other hardships due to the quarantine. 

That money will be allocated by nonprofit groups that already do business with the city, and Casar and Mayor Pro Tem Delia Garza have stressed the need to get the money into residents’ pockets in time to help cover May rents. Whether that happens will go a long way to determining the health of the local rental economy for perhaps the rest of the year.

 While most property owners and managers have taken the Austin Apartment Association’s guidance to work with residents by waiving late fees and setting up payment plans for April rent, the real crunch could be coming as job losses mount and potentially more than one-third of the nation’s renters come up short again.

// The Bingham Group