Over the past several years there's been a lot written about the
. Compared to homeowners, renters spend much less on maintenance and insurance, and, though their lifetime costs may be higher, monthly rents tend to run lower than mortgage costs. But for many, the big sell is mobility—if a new opportunity presents itself on the other side of the city or the other side of the country, or if you just get sick of your current locale, as a renter it's easy to pull up stakes and find a new place.
The flipside is instability—when an area grows in popularity it's liable to grow in cost too. Renters, unlike homeowners, may find themselves with much higher rents, or without an apartment altogether as property owners tear down old buildings to put up taller, nicer, more economically productive ones. What if you could cash in some of that mobility for a little extra stability? Would you take that deal?
The reason this matters is gentrification, of course. Any time a neighborhood gains enough popularity to start renovating apartment buildings and using land more intensively (i.e., building taller and/or denser), rents increase and concerns about displacement of lower-income residents arise. These legitimate concerns tend to degenerate into misguided anti-density developer-bashing, which confuses the cause and effect of gentrification—
, they respond to higher demand by providing more, higher-quality homes—and the very development that can soak up much of that demand may be stifled.
The question these people, and perhaps all of us need to ask is whether we'd be willing to make a greater commitment to our homes in exchange for some assurance against being priced or kicked out of them. For example, if you could sign a three-year lease instead of the typical one-year term, would you do it? A longer lease would offer some protection against year-to-year concerns about keeping your home, but if your circumstances changed and you wanted to leave, you'd be stuck.
Many people in my age range, I think, wouldn't go for that. But under-30s tend not to be the demographic that people are concerned about when they discuss the ills of gentrification, so it's better to ask whether people in their 40s, 50s, or older, as well as families, would be interested in long-term leases. I tend to move every 12-18 months on average, partly because I like change and partly because shifting goals have led me in different directions; older folks tend to stay put longer (I admit I'm speculating here), so mobility is presumably of lesser value to them. It seems likely that many of them would sign onto a longer lease given the option, since it would ensure that any positive changes to their neighborhood would not immediately be felt in the form of increased costs or potential displacement. It wouldn't keep them in place forever, but it would provide a buffer.
Here's how it might work:
Renters could opt for a one-, two-, or three-year lease (or more), and because this would ensure that the property owner wouldn't have to renovate, clean, and re-lease the unit for the duration, longer leases might enjoy some small discount (say, 5%). Depending on market conditions, owners could write a yearly increase in rent into the lease so that rental costs in year two might be 3% higher than in year one. Or they could just keep it the same price for the length of the lease, because even three years isn't very long.
The upside here for the renter is confidence in a) future costs, rather than worrying about whether rent might increase 3%, 10%, or not at all next year; and b) continued tenancy, because they can't be kicked out by new owners who want to tear down or renovate the building until the end of their lease. They aren't as mobile, but if gentrification is a greater concern to them than mobility, then they are able to express that value financially—an option renters don't generally have today. They could put their money where their mouth is, in other words.
Hold-out against new development in the Ballard neighborhood of Seattle, photo from
There are a ton of kinks to work out here, and I haven't even thought them all out, much less come up with potential solutions. This is much more a thought experiment than a solid proposal at this point, so
I invite readers to discuss the pros and cons
here. One obvious problem with long-term leases is that sometimes it's a massive waste of valuable land to keep tenants in an existing building—a two-story apartment complex surrounded by fully-leased eight-story buildings, for example. Or the photo above, which while charming in this case would on a larger scale just be a huge waste of space.
In these cases I think a buyout structure would be fitting: owners would be required to pay out up to six months rent (e.g.) or the duration of the lease, whichever is lower, as a lump sum to remaining tenants if they wanted to kick them out and renovate or build something new before their leases had expired. A months-long waiting period between notification and eviction would also be sensible. This wouldn't solve the problem of displacement (I don't think anything can solve it 100%), but it would give displaced tenants a healthy financial and temporal buffer to find new accommodations. This structured buyout plan would then, in turn, somewhat raise development costs as they'd have to account for the additional cost of removing long-term lease tenants, so it's far from perfect.
What do you think?