Landlords are dillydallying when it comes to applying for Denver’s residential rental license — part of a new program that’s supposed to boost the city’s oversight of health and safety conditions at rental properties.
Applications have been submitted for just 717 units, and only 534 had been approved, as of November 2.
“Out of the 534 licensees, 297 are for multiunit rental properties and the rest are for single unit rental properties,” according to a statement from the department of Excise and Licenses. “The City estimates there are approximately 25,000 multiunit residential rental properties that need to be licensed in Denver.”
Property owners have fewer than 60 days to complete their applications before they will be out of compliance with city law.
Excise and Licenses isn’t exactly surprised that landlords are dragging their feet.
When it was proposed, the program was unpopular with groups like the Denver Metro Association of Realtors, who argued it would unfairly hurt mom-and-pop landlords and the Colorado Apartment Association, which said fees would be passed on to tenants.
After the program passed, city brass assumed the new program would take a few years to gain a high level of compliance.
To make things easier, Excise and Licenses has reduced the number of documents and information landlords need to fill out to apply.
For example, married couples who own a property don’t have to show documentation about joint ownership and instead can add each spouse’s name to the application. Also, on-site managers no longer have to show ID.
“We knew implementing the largest expansion of required business licensing in Denver history was not going to be easy,” noted Excise and Licenses Executive Director Molly Duplechian, in a statement. “It’s important that we continue to look for ways to make the licensing process less complicated, so more landlords can demonstrate their properties meet minimal housing standards and get the required license. If you are a landlord or property manager, there is no reason for you to further delay starting the licensing process with the deadline approaching soon.”
What’s the point of the program anyhow?
City Council created this program “to have a licensing tool to eliminate slumlords, raise the absolute minimal standards for rental properties and give our lawmakers the data necessary to have the first accurate count of rental housing stock in the history of Denver – so they can make educated decisions about policy to improve affordable housing,” explained Excise and Licenses spokesperson Eric Escudero, in an email.
Unlike in many states, not all businesses in Denver are required to be licensed. Generally, licensing is only mandated when businesses pose healthy, safety or welfare risks, he explained.
“The right to live in a home that does not have pests, mold, broken windows, and has functioning heating and plumbing is now more enforceable than ever before in Denver history,” Escudero wrote. “And that is something I think everybody can agree on.
“When critics say the costs will be passed on to the renters, I always ask what has been the excuse for many landlords raising rent for the last 10 years in Denver when there was no licensing requirement?” he continued. “Additionally, what is the value of the cost of a person’s lifespan being reduced due to unhealthy living conditions in a rental property? There is no legitimate argument against the city taking steps to protect life, safety and welfare in residential rental properties. We are determined to do this successfully and that means looking for ways we can make the licensing process easier so there is no excuse for not complying with Denver law governing landlords and property management companies.”
Drew Hamrick, the general counsel and vice president of the Colorado Apartment Association, noted in an email that there are two main reasons application numbers are low.
“The first is an extreme shortage of inspectors,” he said. “When the City Council passed this ordinance, the members mistakenly believed that the certification required to be an authorized inspector was relatively loose. It was commonly said that anyone qualified to perform a home inspection in a sales transaction could provide the required inspections for rental license. Instead, the certifications that are required are very rare and difficult to obtain. The last time I checked, there were fewer than 10 people certified for rental inspections (rather than the thousands qualified for home inspections for the sale). Since the City wants the inspections done before the license is applied for, this bottleneck is preventing license applications.
“The 2nd reason is a lack of knowledge of the requirement,” he said. “Having to have a license issued by the City to rent a housing unit to someone is a peculiar and unexpected requirement (given that you don’t need a license to sell someone that same property and given that you haven’t needed one for the previous 150 years or so). It will take some time for Denver citizens to stumble across the requirement. If the City Council were suddenly to decide that everyone needed a license to go to sell their cars, it would take a while for that to sink in too.”
Some landlords may be waiting to see whether the new licensing requirements will actually be enforced.
While Escudero acknowledged that enforcement will be “not easy,” he explained the city will implement a system similar to the one that regulates short-term rentals like AirBnB.
“Denver has a vendor that scans the internet and looks for listings of rentals and compared that to our database of active licenses,” Escudero explained in an email. “When an online property for rent listing is found that is not licensed, our enforcement team is alerted and investigates. Landlords not in compliance will receive notice of violations to try to get them in compliance. If they still refuse to get in compliance, they are subject to citations and fines. Our first goal is education and outreach. Citations and fines are a last resort.”
When it comes to regulating short-term rental, Denver has a roughly 80% compliance rate.
“From the data we have seen, we believe that is one of the highest or possibly the highest compliance rate in the nation compared to other large cities with short-term rental licensing requirements,” Escudero wrote. “We’ve learned a lot of lessons regulating short-term rentals that apply also to regulating residential rental properties.”
This article has been updated with comments from the Colorado Apartment Association.