should a landlord pass on mortgage hike to renter?

[grasswire]

If a landlord got ARM loans to buy houses for renting out and now those mortgages are hitting the increase, should that cost be passed on to the renter in rent hikes?

Does that seem right and fair? It's not like a property tax increase.

[Bunny]

1. Well, if the increase prices the house out of fair market value for rentals, then good luck with

that.

[ixion]

2. it's not fair, but it's legal

as long as it doesn't violate the lease, if one exists.

[slackmaster]

4. What's not fair about it?

:shrug:

[grasswire]

5. yeah, I know it's legal...

...but does it seem ethical? Should the renter, who entered the contract in good faith, compensate for the unwise financial decisions of the landlord? It isn't something that a renter would anticipate when entering a contract.

[slackmaster]

3. Owning a rental property is a business

A landlord can choose to lose money on a rental property. There isn't any advantage to doing that over the long haul AFAIK.

Most people I know who own rentals charge just enough to pay for debt servicing and maintenance, which means a little more than the loan payment each month since stuff is always breaking. If you start making a large profit you pay large taxes.

[crikkett]

6. and the other thing to consider is the terms of the lease

if there is one.

[Midlodemocrat]

7. My rent went up every year when I rented. Every single year.

By the time I left my last apartment, it had gone up $400 in the five years I lived there.

[123infinity]

8. I wouldn't expect the landlord to support a negative cashflow on the property.

Can't imagine anybody wanting that..well, maybe the tenant. :shrug:
It depends on the terms of the rental agreement, though...he could very well be permitted to raise the rent but I have to confess I'm not feeling real charitable
towards someone in that situation.

[nosillies]

9. As long as he finds someone willing to pay it, he can charge whatever he wants

I'm sure if the landlord wanted to be running free shelters just for the sake of being charitable, he'd be doing so, As it is, he's a businessman.

[azurnoir]

10. Yes it is legal

but I place being in the business of owning someonelse's place of residence somewhere between prostitution and being a paid enforcer for a gang in the world of ethics

[nosillies]

15. Not fair

I've got a house sitting across the country, empty, because we had to move for work, and it hasn't sold after being on the market for months. We're having to try and pay two sets of bills each month, for where we live right now, and that empty house we own. We're going broke, and we're going hungry. I'm about to give up and get a renter in there ASAP. I can't get anywhere near what I pay for the house note in rent, but I can certainly help bandage the gushing wound that is my bank balance.

Is it unethical for me to want to avoid foreclosure and feed my family?

I think there are plenty of people in similar situations right now. We didn't choose to be landlords, but we have no other options. What about that makes us unethical?

[stopbush]

11. Sure. The renter can always move. It's a hassle, but we're in a renters'

market right now, what with people unable to meet their mortgages. Many are renting their "extra" properties.

I am currently renting after owning two houses, and one thing I would like to see is a government safeguard put into all rental agreements that protects renters from getting screwed by landlords who are letting their rental properties go into foreclosure. Renters who diligently pay their rent shouldn't get thrown out on the street when a landlord fails to apply said rent to the mortgage held on the rental property. This is a BIG problem these days. A guy near my house was diligently paying $4000 a month rent on a home when the sheriff showed up and told him he'd have to move because the owner had been foreclosed on. The guy knew nothing about it. In CA, you're given 30 days to vacate. The landlord keeps all the rent you've paid, you're usually out the security deposit and you've got to come up with a new security deposit on a new place (and, you risk running into the same scenario over and over again).

Seems to me a renter should be able to sue the owner for what amounts to a form of grand larceny. You can be prosecuted for stealing an apple from a fruit stand, but a landlord steals thousands of dollars from you for undelivered services (ie: a place to live) that he is CONTRACTED to provide, but as a renter, you're supposed to suck it up while he waltzes away? Why is that?

[On the Road]

12. He Normally Can't Invalidate the Lease,

but after the lease is up, landlords can normally ask for whatever they want. I don't think a mortgage increase is an unreasonable basis for raising the rent.

[TreasonousBastard]

13. A lease is a contract, and unless...

there's something in there about passing on costs, the rent on the lease is the rent.

But, there may be local laws affecting lease terms such as allowing, or disallowing, extraordinary expenses being passed on, and limiting the amount of an increase on lease renewal. And, landlords often can plead hardship, arguing that if they go belly up their tenants are in worse shape than with just a rent increase.

Personally, I'm not sure an ARM increase is in the same league as a tax increase, or heating oil going up, or some other stuff. The owner got a huge initial interest break, and rental property owners typically roll the properties over and refinance every several years to maintain depreciation on the property. So, fuck 'em if they lose once in a while.

[grasswire]

14. plus the fact that taxpayers are bailing out the homeowners if the legislation passes...

....that allows them more breaks.

[2Design]

16. only if he wants empty places to pay the whole amount himself

[tech3149]

17. As a renter, you have to be aware of the property owners

situation. My last landlord wasn't tied down to a possible problem mortgage, but employment was a problem. He was a hard worker, but had to spend almost a year out of work on strike because of a union dispute. I put up $5K to make sure he could cover his expenses. I understand most people might not be able to do that, but for me it was the best choice. I liked where I was living and was comfortable there. I liked the landlord and his family and was the perfect location to take care of my needs at the lowest cost.

I guess the best answer is to look long and hard at the owner and what they own and what their assets are. I wouldn't trust anyone that doesn't have property assets that don't match their yearly income.

I spent three years cutting the grass, fixing anything that broke in my house or the landlords. I don't see that as a price, it helped me live a more sustainable lifestyle and avoided spending money to move when I really didn't want to.