TOP 10 LEAST LANDLORD-FRIENDLY STATES IN 2023
Certain states favor tenants over landlords. Generally, these tenant friendly states tend to fall on the Northern side of the country while Southern states tend to be more landlord-friendly. This divide dates back to the country’s early days.
The Southern states depended mostly on agriculture and were populated with landowners. So, laws were written to protect the landowners and their properties. The Northern states, which were more reliant on manufacturing and trade, developed rental policies that favored renters to foster immigration.
In tenant friendly states, landlords find it more difficult to evict renters, screening is more circumspect, and security deposit restrictions are very strict.
New York
Apart from being one of the most expensive housing markets in the United States, New York has a lot of restrictive policies concerning landlords and investors. These policies tend to differ depending on the type, size, and peculiar condition of the rental.
These policies specify how long you rent, how much you can charge for application fees and late fees, how much you can collect as security deposit and for rent. As an example, you can only charge $50 or 5% of the monthly rent, whichever is less, as a late fee.
Property taxes vary widely in New York. In the Big Apple, property owners pay 0.88% while in Suffolk county, landlords pay up to 2.37% in property taxes. The average property tax statewide is 1.69%.
California
While California is one of the states with low property tax rates, several cities in California have rent control on residential real estate properties. California was one of the first states to put statewide rent control into law. Additionally, several regulations restrict how much you can charge for application fees, how you screen tenants, and the eviction process.
Oregon
Oregon was the first state to impose a statewide rent control policy in 2019. This placed several restrictions on landlords in the state. Some of these include:
- Rent must not be increased by more than 7% in a year.
- Renters who have occupied a property for up to a year cannot be evicted without cause. Non-payment of rent is the most common legal cause of eviction in Oregon.
- Landlords who violate these laws will have to pay tenants up to three months’ rent plus damages.
Washington
Washington is in between landlord friendly and tenant friendly. Depending on the reason for the eviction, evictions may take longer than a month. But a landlord has to give at least a 5 day eviction notice before starting proceedings. There is rent control in places like DC. Also, in Seattle, landlords have to obey the “first-in-time” or FIT rule.
First adopted in 2016, this law dictates that landlords must rent their property to the first tenant who meets the requirements. Seattle prohibits landlords from actively choosing their tenants, forcing them to screen applications according to when they were submitted and give tenancy to the first qualified tenant.
Maryland
The Old Line State has several provinces that impose rent control policies. Landlords are mandated in Maryland to be registered and licensed before accepting tenants. Also, Maryland has strict regulations on security deposits, late fees, and lease agreements. Landlords must give tenants a written 10-day notice for unpaid rent. Evictions can take up to two months.
Vermont
According to RentCafe, Vermont is the most tenant friendly state in the United States based on a ranking system that focused on particular aspects of the landlord-tenant relationship, such as legislation on security deposits, eviction notices, and rent increases.
Eviction for unpaid rent must follow a 14-day written notice by the landlord. Landlords must give a 60-day notice before increasing rent. Landlords need to provide a 48-hour notice before entering the premises and a 14-day notice for eviction due to unpaid rent.
Nebraska
Nebraska has a median property tax rate of 1.76%, much higher than the national average. Landlords are allowed to withhold security deposits for not more than 14 days after the tenant moves out. Tenants are allowed to withhold rent if important repairs are not carried out.
Rhode Island
The Ocean State has a median tax rate of 1.36%. A 20-day notice is required for eviction and tenants are allowed to make repairs and deduct the cost from the rent. The landlord must give a 48-hour notice before entering the property.
Nevada
Tenants are allowed to withhold rent and “repair and deduct” if the landlord fails to make major repairs. Late fees must be clearly stated in the lease agreement and must not be more than 5% of the rent.
Delaware
State laws in Delaware allow tenants to withhold rent payments if major repairs aren’t carried out or deduct the costs of repairs from their rent. A 5-day notice is required for non-payment of rent before eviction. To raise the rent, landlords must give a 60 day notice to their tenants.
SHOULD YOU ONLY INVEST IN LANDLORD FRIENDLY STATES?
In the end, landlord-friendliness shouldn’t be the only factor influencing your investment decision, but it should influence your choice to a certain degree since you cannot change the location of your real estate investment.
Investing in one of the most landlord friendly states can save you a lot of hassle and money. Yet rental property in a landlord friendly state with few potential buyers will not make you as much money as property in a tenant-friendly state with an active housing market. So, demand is an important factor to consider in choosing your investment location.
Also, it’s possible to have a landlord friendly city within a tenant friendly state as well as the reverse. Therefore, in addition to state property laws, check out local laws as well.