Upgrading the county's property Livability Code, the local standards set for owners of rental properties, probably isn't going to have the effect the Harford County Council intended when it put the wheels in motion last week for such an upgrade.
Responding to a very real problem in Edgewood — the only Harford County community regarded as a mortgage crisis hotspot — the council decided to authorize a review of the Livability Code.
Speaking last week in favor of reviewing the code, County Councilman Dion Guthrie, who represents Edgewood and Joppatowne, outlined a bizarre economic situation that has evolved lately: homes that had been selling in the $100,000 to $150,000 range (relatively low prices during the boom years in Harford) are selling for less than $25,000. Guthrie pointed out that it is possible for an investor to buy such properties, then lease them for $1,000 a month and have them paid off in two years.
A substantial portion of this issue really isn't much of a concern. It's a good thing that savvy investors are buying houses at bargain prices. Guthrie goes on, however, to note that the stage has been set for a situation where what he called "devious investors" end up putting rental properties on the market without making routine improvements to them. In other words, he's worried about slumlords.
It's a legitimate concern, but the Livability Code isn't necessarily the best mechanism for dealing with it.
It's worth keeping in mind that when Havre de Grace, which has a substantial amount of rental housing, sought to do this a few years back, the political uproar against it was substantial, the resulting legislation relatively weak and the ultimate effectiveness of what ended up getting done was limited at best.
Approaching the issue from a financial angle might have more of the intended effect. One of the things that makes low-end rental properties attractive investments is the reality that landlords can attract tenants who qualify for housing assistance. That assistance is based on market values, and a few years back it wasn't unreasonable to expect a tenant in a house to pay $1,000 a month or more. But if the cost of property declines, it stands to reason that the government subsidy for people renting those properties should likewise decline.
A real estate speculator of dubious motives would be likely to shy away from a property if the potential subsidy were tied to the property's purchase price, rather than what the market demanded a few years back. Meanwhile, speculators interested in keeping their properties in good repair, knowing that this will add to future value, would be willing to make the appropriate financial arrangements to both keep the property up and to lease it at a rate that allows for a fair profit.