Seattle Audit Report: Mom-and-Pop Leaving Seattle Rental Market

Posted By: Tim Hatley Government, Policy News,

•  Frustration with city regulations is cited as a major concern.
•  Nearly 7,000 single-family rentals homes are no longer on the market.
•  Audit recommends new policies to support small housing providers.

A recently released City of Seattle City Audit Report of the Rental Registration and Inspection Program (RRIO) confirms what RHAWA members have been saying for the past few years; the complicated and overly burdensome new tenant rights regulations are chasing small “mom-and-pop” housing providers out of Seattle.

The report further recommends that if Seattle leaders want to preserve single-family housing and small multi-family property rental housing, they should enact policies that support the continued presence of this type of property in Seattle’s rental market.

The Seattle Office of City Auditor was directed by the city council to review Seattle’s RRIO program to better understand why there was a reduction in rental registration properties even though the total number of rental units has increased. Their conclusion was simple: while thousands of small rental housing providers left the market, the number of large-multifamily properties entering the market exploded.

Using a variety of reputable data sources, the audit report identified nearly 7,000 RRIO-registered properties that were sold between 2016 and 2022 and that nearly 90% of those were properties of one to five units.

As a part of their research, the Seattle Office of City Auditor (OCA) developed a survey to gather data on attitudes and experiences of property owners and managers who either sold their rental properties or did not renew their RRIO registration. OCA employed a selective strategy to recruit participants, focusing only on those landlords or former landlords who stopped renting at least one of their rental units in Seattle between 2016 and 2022.

A whopping 78% of respondents said it was either hard (22%) or very hard (56%) to comply with the City of Seattle rental rules. 67% of those surveyed cited the difficulty in complying with City of Seattle rules and regulations as the reason they decided to leave the Seattle rental market.

57% surveyed said they sold their property or no longer own it. 41% of those who sold their rental bought another rental unit outside the city of Seattle. Only 1% of those who sold bought another rental unit inside Seattle.

Clearly OCA figured out why RRIO registrations plummeted - the city’s aggressive efforts over the past decade in instituting anti rental housing ordinances.

As a result of their research, the report concludes, “This data suggests that more small properties are leaving the Seattle rental market, which reduces the variety of housing options available to renters.”

The report further goes on to note that according to the City of Seattle’s Comprehensive Plan 2015-2035, one objective of the city is to achieve a mix of housing types that provide opportunity for people of various ages, races, ethnicities, and cultural backgrounds and for a variety of household sizes, types and incomes. The report then references a 2021 market-rate housing needs and supply analysis by Berk which states smaller rental properties “tend to be older, and are generally more affordable, while there has been an increase in larger properties, commanding significantly higher rents”. This obviously presents challenges to the city in meeting their housing goals.

As a recognition to the Seattle housing goals challenges, the report’s first recommendation states: “If the City of Seattle wants to preserve single-family housing and small multi-family property rental housing, they should enact policies that support the continued presence of this type of property in Seattle’s rental market. When considering such policies, the city should involve stakeholders most impacted by rental housing policies.”

RHAWA would welcome such an undertaking that considers, from the rental housing providers perspective, policy considerations that would help preserve affordable single-family housing small multi-family rental units. Who would know better what incentives and or regulatory reforms that could be enacted than rental housing providers.