Tool 6: Good Landlord Incentives
Aggressive regulatory strategies that treat good and bad landlords alike, and are seen as punitive, may improve conditions in some areas, but may make things worse in others, if they drive landlords out of the market and lead to increased vacancy and abandonment. To build a body of responsible landlords, a city must go beyond regulations to create a landlord incentive system. Incentives and regulations are interactive strategies. Some of the most effective incentives tie into the regulatory system by offering regulatory relief as a product of responsible behavior. Landlord incentives fall into three general categories:
Single focus programs
Training programs. Many cities offer landlord training programs. The city of Milwaukee offers a free training program to landlords that concentrate on how to be a “proactive property manager” including code compliance, applicant screening and how to recognize and deal with drug and other illegal activity. The program is five hours long, and at the end participants receive a free 100 page manual with useful information about the legal and business issues associated with managing rental property.
Crime reduction programs. Most training and many financial incentive programs focus on getting landlords to reduce crime in and around their properties. Many follow the model known as the Crime Free Rental Housing Program, initially developed in Mesa, Arizona in 1992, and now actively promoted by the International Crime Free Association.
The Crime Free program is based in part on the approach known as Crime Prevention Through Environmental Design (CPTED.) CPTED strategies, which grew out of Oscar Newman’s research into defensible space in the 1970s and 1980s, rely upon the ability to influence offender decisions that precede criminal acts by affecting the built, social and administrative environment.
Another promising but demanding model that can be used to reduce crime in rental housing is the SafeGrowth model developed by Gregory Saville and implemented through a partnership with the LISC Community Safety Initiative.
Financial incentives. A straightforward way to encourage good behavior is to reward it. One way some cities do this is by reducing or rebating fees to landlords who participate in good landlord or similar programs. Responding to complaints costs the city money, so it is good practice to reward landlords for the absence of complaints by sharing the city’s savings with them.
While it might seem that this sort of incentive is not that different from levying penalties for violations or other complaints, behavioral economics has shown that people behave very differently under the two sets of circumstances.
The most effective incentive programs are multifaceted ones that are based on a broader definition of good landlord behavior rather than solely the absence of criminal complaints, and offer participating landlords a wider variety of benefits.
Potential incentives cities can offer in a Landlord Incentive Program
The comprehensive approach is most widely used in the United Kingdom. It is known as the Landlord Accreditation Scheme, each city can tailor it to its own needs and preferences. It is a model that could easily be adopted by American cities.
Incentives to acquire and upgrade properties
Other incentives can encourage responsible landlords and investors to expand their holdings or make major improvements to the properties they already own.