What is to be done about “flipping” & displacement?

Small Property Owner AssociationWhat is to be done when tenants are evicted and their buildings purchased in order to renovate them and rent or sell at a market price? It’s called “flipping,” which, besides not having power, is what bothers tenant advocates most.

First, we must look at the big picture and recognize that housing in lower-income neighborhoods often is in relatively poor shape. That is why rents are lower and poorer people live in this housing. But this housing at some point needs to be upgraded in order to last for the long run – 50 or 100 years or even longer. Builders and “flippers” achieve this upgrading at no cost to government. Most of Boston’s rental housing has already passed the one-century mark and can be expected to last another century or two, with good care.

So the gentrification that is so easily bad-mouthed is not as bad as its reputation.

But still the question remains: How can we keep people in their housing at reasonable rents, if doing so is feasible? Two major forces pushing to modernize older housing are the state sanitary code and the state rent withholding law, which interact with each other. The code essentially requires middle-class housing for all residents in the state, and the rent withholding law threatens owners with near-catastrophic financial harm whenever their rental housing falls short of the code.

As we argued during the debate on rental inspections, the city’s primary concern should be the safety and health of residents, not minor or cosmetic code violations that are not real dangers. To repair those violations requires additional investment in the housing or major upgrading to eliminate them, which inherently pushes rents up. And even those minor violations can subject an owner to zero rental income for an extended period if tenants are fighting eviction for nonpayment, a situation that occurs most frequently in lower-income neighborhoods. For some owners lacking resources, selling to flippers is their only choice.

But two changes could help preserve lower-income housing and their tenants. First, the sanitary code standard needs to be eased up so that it is not illegal to have minor or cosmetic violations as long as basic safety is ensured. A corollary would be to allow owners to do minor repairs legally without a building permit and without hiring a contractor, to keep costs and rents down.

Second, rental property owners can be educated on what repairs and improvements work best to preserve housing for the long run. Leaky roofs, for example, are critical to long-term preservation, yet easily ignored in the short run. Foundations are also important. New siding? Perhaps not.

If tenancies cannot be preserved in existing housing, however, what could be done then? Relocation services could be provided. Boston itself may not have many lower-income neighborhoods with vacant units, but tenants could be directed to locations outside the city limits. Perhaps public transportation can be developed to these areas. We are not downplaying the dislocation that tenants may feel, but it can be eased – and humans are a migratory species that in prehistoric times roamed through large ranges in nomadic packs of hunters and gatherers.

The proposed new Office of Housing Stability might be the right place in Boston to tackle many of these issues. Rent control, as proposed in the “just-cause eviction” effort, however, is not the solution. Under rent control, housing steadily deteriorates with no avenues for renovation or preservation, and lower-income people do not easily remain in the controlled housing. See the following article for yet another approach to the problem.