Real estate mogul Barbara Corcoran is dead-set against rent control.
The Shark Tank investor recently railed against a new law that is set to pass in Oregon, which would impose mandatory rent controls on the entire state.
“Let me tell you, they're out of their mind,” Corcoran told Yahoo Finance’s On The Move. “They’re nuts to even contemplate it, and to pass it. I couldn't believe when I heard that news.”
The legislation will prohibit landlords from ending month-to-month leases without cause after 12 months of occupancy and limit rent increases to once a year. Rent increases are confined to 7% above the annual change in the consumer price index. Also, Landlords can only terminate agreements after giving a written notice to the tenant 90 days in advance, and paying the tenant back for one month’s rent.
Corcoran said the law won’t incentivize landlords to keep their property in good shape — which could lead to the neighborhood’s decline.
“I moved into New York City when rent control first came out the first year,” Corcoran recalled, “and I watched good decent middle class neighborhoods decay at the core, because they overlooked one little detail. What landlord wants to continue to put money into his properties — and I know, I'm a landlord — when you can't meet your expenses?”
She said everyone has an ideal scenario of how rent control would play out, but “give it five years,” and the detrimental effects would start to show.
The rent control rules have been proposed to address a worsening housing shortage in Oregon.
In the map below, Oregon’s largest city of Portland is facing a shortage in all of its counties, particularly for people below the median income range.
“They're short sighted. I'm sure everybody's feeling really good about protecting everybody on that,” said Corcoran. “But wait five years.”
She also said of the state’s additional idea of converting areas that are permitted to only have single-family homes to now be allowed multi-family housing and duplexes, predicting that “it won’t go over.”
“No matter how you look at it, makes no common sense,” said Corcoran. “Landlords are going to sell their property for less. The value is going to top off on investment in the state. They're silly to even think about it.”
Aarthi is a writer for Yahoo Finance. Follow her on Twitter @aarthiswami.