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BUILDING EFFECTIVE RENTAL HOUSING REGULATION IN COOK COUNTY
Alan Mallach, Senior FellowCenter for Community Progress
October 13, 2015
Increase in rental housing 2005-2014Al
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10%
20%
30%
40%
50%
60%
70%
80%
90% Suburban Cook County Chicago
The market is changing
• 55,000 more rental units, and 30,000 more single family rental units in suburban Cook County today than in 2005.
• This is an opportunity and a challenge.
Opportunities and challenges
• Opportunities for families seeking rental housing in suburban communities
• New and inexperienced absentee landlords with limited skills and capacity
• Difficulty maintaining scattered site properties• Predatory, speculative investors in low-price communities, particularly in South Cook County.
Low prices are a major problem
• Investor buys a 3 bedroom house for $20,000 and rents it for $900/month (tenant pays utilities)
• Gross income (with 10% vacancy) over three years = $29,160 – annual return on cash flow alone 15.3%
• Gross income with voucher
(with 5% vacancy) over three
three years = $43,947 –
gross annual return 39.9%• Expenses = ?
The response
• Effective municipal regulation, coupled with pro-active strategies and incentives, can improve rental housing quality and reduce problems.
• The most effective strategies are based on licensing and regular property inspection
• Effective regulation cannot be punitive – must be geared toward building a strong landlord community – ‘raising the bar’.
Raising the bar
• A rental licensing ordinance based on sound standards and regular inspection
• A performance-based system oriented toward fostering compliance
• A landlord support system• Incentives for good landlords• System must be sensitive to different legal powers of
home rule and non-home rule municipalities.
Elements of an effective ordinance –Home rule municipality
• Findings• Definitions• License required; application procedure• Inspection and re-inspection• Issuance of licenses• Annual performance evaluation and property
classification• Performance based standards• Fees• Violation; penalties
Elements of an effective ordinance –Non-home rule municipality
• Findings• Definitions• Landlord obligation to register (informational)• Nuisance physical conditions• Other nuisances• Outcome of chronic nuisance determination; registry• Inspection; re-inspection• Annual performance evaluation and property classification• Effect of annual review• Fees• Violation; penalties
A proactive approach
• Find landlords – don’t wait for them to come to you• Work with landlord community – it’s in their
interest, too. • Help build landlord and property management
capacity • Build local government capacity through inter-
governmental and partnerships with private and non-profit entities.
©2014 Center for Community Progress. Center for Community Progress owns all copyright for this presentation. You may reproduce copies of this presentation for non-commercial use to share with colleagues at your organization. This presentation may not be copied or reproduced for other purposes without the express written permission of Center for Community Progress.