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Turn on any news broadcast, and within five minutes you’re guaranteed to be swamped with the latest political news. And understandably, due to information overwhelm it may be all too tempting to simply tune the noise out, at least momentarily.
While it may seem an unlikely candidate, politics can actually serve as an interesting bellwether to military families as they grapple with the quintessential housing dilemma of each PCS: "Should we rent or buy a home?”
You may be asking, How on earth can a blowhard politician help me figure out whether we should rent or buy at our next duty station? What could they possibly have to offer that doesn’t send my blood pressure through the roof just listening to them?
The bipartisan answer is beautifully simple.
Politicians make policies and pass legal statutes that tend to particularly affect landlords and the rental and housing markets of their given states. Very useful information to a military family, who can count on one certainty in military life – moving, and often.
Here are three strategies to make politics work for you as you make your decision!
How Politics Could Sway Whether You Buy or Rent a Home
Is Your New PCS to a Tenant- or Landlord-Friendly State?
No matter what state you are moving to, some form of Landlord/Tenant law will apply. True, while Fair Housing laws are established at federal levels, individual states have significant flexibility when it comes to creating additional state-level statutes and governance for buyers, landlords, and tenants. Flexibility that politicians tend to wield toward either tenants or landlords.
This hits home as a military family. Buying a home in the military and facing frequent moves means there is a chance you may be placed in a situation where you become a landlord, whether willingly or reluctantly. And while there are many factors to consider before becoming a landlord, bureaucratic policies in a given state do tend to favor either the tenant, or the landlord.
Differences in state law are very apparent in:
- The requirement (or not) to obtain a rental license (for landlords)
- Environmental licenses (i.e. lead-based paint affidavits)
- State-wide (or city-mandated) rent increase controls
- Requirements for handling a tenant’s abandoned property
- Eviction timelines for non-payment of rent or lease violations
- Security deposits (some states enact a maximum allowable collection and a sharp timeline/method for return)
It won’t take much digging to find the depth of bureaucratic and political policies in place or political leanings when it comes to a state’s landlord/tenant law. Obtaining that knowledge is well-worth the effort and can significantly assist in the decision to ‘rent or buy’ in a given state.
TIP: Before you buy, ask yourself the question, “How hard would it be to become a landlord in this state?”
You may find the flexibility and protection as a renter the best choice for your family.
Rent Controls
As a renter, maximum allowable rent-increase controls are a good thing, and a “tenant-friendly” stipulation. However, if you buy a home and then later become a landlord, rent controls can present a new set of financial challenges.
Ideally, your rental price point would be enough to cover your monthly mortgage and perhaps even provide a small savings cushion. However, if there are mandatory rent controls set by the state (or even city), adjusting your rental income as needed could become a challenge.
But why and how do rent controls happen?
Many states facing a shortage of affordable housing options, a growing homeless population (both of which tend to make news headlines), often turn legislation to landlords in a political attempt to “do something” about the housing problem. That “something” often takes the form of setting mandatory rent controls that favor tenants and reduce the “greed” or “exploitation” from would-be landlords.
Granted, at a corporate level, this may be a workable solution. But as a small landlord with one or two properties, mandatory rent controls run the risk of turning into a financial hardship versus a wealth-building tool.
Interestingly, “landlord-friendly” states swing the opposite way and have legislation on the books expressly prohibiting or pre-empting placing rent control stipulations upon landlords.
The political manifestation of rent control policies (or not) can definitely nudge you to one side of the ‘rent or buy’ fence, and help make a difficult decision a little bit easier.
Taxation, Licenses, and Other Assorted Fees
Without question, the discussion of taxation is one of the most hotly contested topics within politics. And taxation policies in the state you're PCS'ing to can hold significant clues in helping you make the decision to rent or buy.
Regarding taxes, the first thing that comes to mind for many military families facing a move is transferring to states with no state income tax, of which there are currently seven (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming). However, states with no income tax will often make up for lost revenue in other ways, such as high property taxes. A buyer and landlord would be subject to these property taxes, whereas a renter would not.
Additionally, for those thinking of buying and potentially becoming future landlords, state income taxation is vital to realize. Rental income earned in a state that levies income tax upon its residents may create the new burden of filing a state income tax return.
Furthermore, additional requirements beyond state or local taxation (requirements that may be good for a tenant or the environment), manifest monetarily upon a landlord’s shoulders. States or municipalities may pass the requirement for a number of mandatory rental housing licenses and fees, with evasions resulting in stiff fines.
Some states have also passed strict environmental regulations, requiring additional licenses and fees (usually paid to the state Department of the Environment or Health) to certify any rental they offer meets established guidelines.
- The requirement for additional state-governed “Lead-Based Paint Abatement, and Certifications” is a notable example.
- The federal “Residential Lead-Based Paint Hazard Reduction Act” requires landlords (in properties built before 1978) to provide a “Lead Warning Statement,” and disclose any known information about lead-based paint in the property. But this federal law falls short of forcing a landlord to actually test and mitigate for lead. State laws can be more stringent and force a landlord to test and mitigate by requiring Environmental Licensing in order to operate their rental.
- In some states and cities, a rental license is required. To be issued one, a landlord must first provide an environmental license (usually for lead-based paint). A rental license will not be issued without obtaining the environmental clearance first.
TIP: Before you make the decision to buy, take a quick look at landlord/tenant statutes in your new home state. Landlord licensure requirements, fees, rent controls, and governance on maximum security requirements are good starting points to see which way a state leans politically for housing.
Of all the challenges that accompany a military lifestyle, one of our community’s greatest strengths is that we are not alone. Whether you decide to rent and need some tips on how to find the best rental before you PCS or have decided buying will be the best solution for your family, there is a wealth of information available here at MilitaryByOwner! Learn from other military families, get actionable resources and advice from real estate experts, download free e-books and more, all from the comfort of your own home.
And while there is no crystal ball to answer the ‘rent or buy’ question for your family, taking a look at the existing political leanings of a state can give a valuable hint for military families and their unique housing situations. Whiffs of proposed housing and rental legislation tend to float to the political surface, particularly when candidates are pressed hard for their views and platforms and what they see as top election issues.
You might even find yourself leaving the political news-reel on a bit longer!
