Portland Rental Laws: 2020 Game-Changers
Right around $2,000/month: That’s what the median renter pays in the Portland metro area, according to Zillow. For those looking to buy an investment property, that might sound like a pretty nice number.
Of course, those who do their research on renting out a home in Portland will soon find that it’s not as simple as it first seems. From property taxes to maintenance, owning a Portland rental can be costly. Then there are the Portland laws governing landlord-tenant relationships, which in 2019 are more complex than ever.
As real estate agents, we do encourage anyone interested in purchasing an investment property — or purchasing a primary home and renting out a bedroom, basement or Accessory Dwelling Unit — to do so. Becoming a landlord can go a long way toward building wealth over your lifetime and help you retire when the time is right.
Portland Property Management Company vs Owner-Managed Rentals
New landlords may be intimidated by the amount of work involved in managing a rental, as well as by the legal burden of staying ahead of Portland’s landlord-tenant law. That’s why property management companies come in handy. They handle everything, from screening tenants to collecting rent to making repairs. For a fee of between 7-12% of your rental earnings, that can seem like a pretty good deal to new Portland rental owners who have day jobs. We also recommend hiring an attorney to advise you on this business venture.
Then again, maybe you purchased a rental unit to maximize profits, and you’re starting out small. Or you’re just one of those people who like to do it yourself. In that case, we advise our real estate clients to understand that they need to become self-made experts in applicable Portland rental laws.
New 2019 Portland Rental Law: Rent Control
Yes, there is now statewide rent control in Oregon — but it shouldn’t turn potential landlords away. The amount that rents can go up will now be limited each year to 7% plus the rate of inflation, to be determined by Oregon state economists. For most Portland rental owners, however, hiking up rents over 7% is not usually necessary or advisable. As a landlord, your primary goal will be to find good tenants and keep them in place for as long as possible, because turning a unit over costs money. Raising rents more than you have to is a sure way to encourage good renters to move. In fact, typical rent growth in Oregon is far slower than what’s allowed under the new rent control caps, and that isn’t expected to change anytime soon.
New 2019 Portland Rental Law: No No-Cause Evictions
Perhaps more controversial than rent control is the new law that prevents landlords from evicting tenants without cause. Again, this law applies to all Oregon rentals, not just Portland. It says that landlords must cite a cause, such as failure to pay rent or other lease violation, when evicting renters after the first year of tenancy. If the landlord needs to evict a tenant in order to sell the home or make major renovations, they have to provide 90 days’ notice and pay one month’s rent (relocation assistance) to the tenant. Note that the Portland relocation money you have to give is typically going to be a lot higher than the State’s. However, landlords with fewer than five units are exempt from the payment (Oregon). The Community Alliance of Tenants has a great page on this law and their site is very easy to understand, up-to-date, and informative.
Go straight to the pros: Oregon State Bar
They do a great job keeping up with the latest Oregon rental laws and have an extensive section of their site dedicated to landlord tenant law.
Portland Mandatory Renter Relocation Assistance (Lots of money)
Honestly, it is best simply to read up on this straight from the city of Portland’s website. It is a very complicated law with very few exceptions and can cost the landlord up to $4,500 a renter right now.
Disclosures, Fees, Tenant Rights and other Laws to Know
Some Portland rental laws aren’t new but are important for first-time landlords to get a grasp on before they enter the rental market.
- Disclosures. Before you can rent out a unit, there is a long list of disclosures you need to make to your tenants. These include legal definitions like who is the owner and manager of the property, but also logistical information like who is responsible for paying utility bills, what the smoking policy is, information about smoke and carbon monoxide detectors, etc. Usually all disclosures are included in the lease or rental agreement.
- Fees. Oregon landlords may only charge nonrefundable fees to tenants in certain events that must be spelled out in the lease. For example, paying rent late, violating smoking policies, or damaging the property.
- Tenant Rights. In Oregon, landlords can only access their rental after giving 24 hours’ notice to their tenants, unless it’s an emergency. There are also rules about what to do with property left behind by tenants, special protections for tenants who are victims of domestic violence, and housing discrimination protections for all tenants (also known as Fair Housing rights).
- New laws headed for the books in 2020. In Portland only, the “Fair Access in Renting” ordinance will go into effect early next year, requiring rental owners to screen prospective tenants on a first-come-first served basis. The law also prioritizes people with disabilities to rent accessible units, places a cap on required income-to-rent ratios for tenants, and limits the use of credit and criminal history as a way to screen tenants. For much more on this, check out the FAQ from the City of Portland: https://www.portlandoregon.gov/eudaly/article/727840
Portland Rental Owners’ Resources
This article is just the tip of the iceburg for rental laws in the Portland area. So how can the new property owner start the learning process and avoid liability, lost income and more?
- Read online. This article on Oregon Landlord-Tenant Law on nolo.com (a trusted publisher of DIY legal guides since 1971) is a good place to start.
- Talk to Portland Housing Bureau. Their Rental Services Office has a helpline and on-site staff to provide technical assistance and information specific to mandatory renter relocation assistance and the new rent control law.
- Join an association for rental owners. They offer educational programs to guide you toward success as a landlord, as well as monthly meetings, newsletters, and people to call if you get stuck.
- Talk to your real estate agent. We can help refer you to the right property manager, law firm to help you set up your rental agreement, or maintenance people to do the heavy lifting.
Ready to start looking for your perfect Portland investment property? No matter how big or small, our team is here to help you. Contact us today!October 18, 2019