According to a recent article published by the Chicago Tribune, community organizations, such as housing associations, have different attitudes towards renters depending on the current economic climate.
The article states that, during the 1990’s, when real estate developers were initiating more new construction projects, there were fewer restrictions so as not to deter prospective purchasers. Accordingly, the developers usually allowed the leasing of units within the project. In the early and mid 2000’s, many communities began adopting restrictions regarding non-owner occupants, often banning renters outright.
With the financial crisis of 2008 came a crash in the real estate market and subsequent proliferation of foreclosures. As many home owners became unable to pay their mortgages, housing associations amended their governing documents to again permit the leasing of properties under their purview.
In most current real estate markets, property values remain depressed, encouraging investors to begin purchasing again. However, many potential purchasers are wary of the risk renters posed to the value of the property they were interested in buying. To attract more buyers, community associations once again began adopting restrictions against renters.
All of this flip-flopping raises some interesting questions about the positives and negatives of allowing owners to rent out their properties. On one hand, allowing property owners in financial trouble helps to avoid the ever-increasing number of Illinois foreclosures. Since the start of the financial crisis in 2008, the number of foreclosures in Illinois has increased dramatically. According to realtytrac.com, one in every five hundred twenty eight properties in Illinois is currently in foreclosure. Through the first half of 2013, Illinois posted the nation’s third highest foreclosure rate: 1.20% of housing units with a foreclosure filing.
According to Salvatore Sciacca, president of Chicago Property Services Inc., “Renters also keep a unit from becoming vacant. Vacant condos are sometimes left unheated, and that has resulted in water pipe breaks.” Another benefit of allowing renters is that community associations can still collect annual assessments from renters. This is obviously a favorable alternative to allowing a property to fall into foreclosure, at which point the association may not collect any assessments for years.
On the negative side, whether legitimate or not, there is a widespread perception that renters maintain their properties with the same degree of care as an owner. Renters that do not properly care for their properties cost associations in the form of additional maintenance and insurance costs.
Another oft-cited concern by associations is the detrimental affect renters have on an association’s ability to obtain loans. When the number of non-owner occupants reaches a certain percentage in a given development, it no longer qualifies for capital improvement loans or Federal Housing Administration mortgages.
As this blog has mentioned before, whether it’s deserved or not, renters often get a bad rap. If you have questions regarding the rights and obligations you have as a tenant or believe you have been the victim of the unfair practices of a landlord, contact the experienced real estate attorneys at The Slater Firm, Ltd. today.