VERY LITTLE WILL CHANGE FOR CT PROPERTY OWNERS WITH NEXUS MANAGED RENTALS
There’s no doubt that the residential housing market is a bit stuck across the country due to low supply and unfavorable interest rates. According to the National Association of Realtors (NAR), there were roughly 15,000 CT homes on the market in January of 2019. This January, that number was a paltry 3,600!!!
This summer, Governor Ned Lamont signed into law a major housing policy package. While Democratic leadership was hoping for more in their effort to increase the state’s housing stock through affordable housing zone reform, there are several new provisions regarding new renters’ rights that many state lawmakers are happy about. As a rental property owner, it’s important that you know what’s in the new law, when it will be enacted, and what you can do to make sure you’re acting in accordance.
LEARN MORE: HOW CONNECTICUT’S NEW HOUSING POLICIES WILL AFFECT RENTERS
ANOTHER EXAMPLE OF HOW PROFESSIONAL PROPERTY MANAGEMENT MAKES LIFE EASIER FOR RENTAL PROPERTY OWNERS
Connecticut is not alone in this housing crisis and across the country D-I-Y property owners are doing their best to keep up with legal changes meant to stimulate the housing supply and support the increasing amount of renters. Nexus Property Management operates in four states and its clients don’t have to lose any sleep wondering if they’re up to speed on ever-changing legislation. For those in the Nutmeg State who don’t have a professional in their corner, here’s a quick rundown of some of the highlights and how hiring a property manager will help you meet these requirements.
LEARN MORE: SYSTEMS MATTER: WHY DO IT YOURSELF PROPERTY MANAGEMENT FALLS SHORT
APPLICATION FEES:
In a normal market, potential tenants might apply to an apartment or two with the hope of being accepted in either. Today, with supply so low and competition so high, many tenants need a place urgently and the odds are against them. For that reason, they might apply to many vacancies, each one requiring a separate application fee. In neighboring Rhode Island, a law prohibiting application fees was passed this Spring. In Massachusetts, application fees are not allowed either, but like in RI, the costs of background checks can be covered. Here in Connecticut, landlords can charge no more than $50 and they’ll need to provide renters with a copy of the screening this covers. This change will be enacted and enforced beginning in October.
Nexus Property Management clients won’t have anything to worry about. Nexus franchises throughout New England and in Arizona, charge minimal application fees, in accordance with governing laws, to cover the screening process. This ensures fairness for potential tenants and allows us to make strong recommendations to our clients regarding which tenants will be the best match for their properties.
LEARN MORE: RESEARCH SHOWS MOST PROPERTY MANAGERS ARE PRICELESS, LITERALLY
MOVE-IN OR MOVE-OUT FEES:
As of October 1, landlords in Connecticut will no longer be allowed to charge move-in or move-out fees. With Nexus, that’s no problem. There are no move-in, move-out, or upfront fees altogether! Clients pay for services rendered with no strings attached.
LEARN MORE: WHAT ARE YOUR STRENGTHS AND WEAKNESSES AS A REAL ESTATE INVESTOR?
PRE-OCCUPANCY WALK-THROUGHS
Currently, there is no requirement that tenants be allowed to physically view the area they’ll soon call home prior to their signing a lease agreement. Therefore, they’re totally at the will of the landlord in terms of trusting that the unit is in the same condition it appeared to be in during advertising (typically in the form of online photos). That will no longer be the case beginning in 2024.
When Nexus advertises units, it includes a multitude of photographs (at least one from each room), in addition to a narrated, walk-through video. It is mandatory that anyone requesting to see the unit first watch the video. In that way, they’ve gotten to see the unit thoroughly before they come for their walk-through. Not only do they get to see the property in person, but they also have access to the video for documentation purposes.
LEARN MORE: VISIT NEXUS’ YOUTUBE CHANNEL TO SEE COUNTLESS VIDEO ADVERTISEMENTS
SECURITY DEPOSITS:
In Connecticut, landlords have been allowed 30 days to return tenants’ security deposits after a tenant vacates. If security deposits are returned later than that, landlords can end up paying twice the deposit amount as a penalty. It’s well worth noting that Connecticut already allows for up to 2x rent for the security deposit, so returning a deposit too late on a rent that was just $1000 could end up costing you $4000! Importantly, that 30 day window will be changed to just 21 days in two months. Security deposit returns also need to include interest accrued during the tenancy. The risk of making a costly error in this area alone is enough to justify at least talking to a property manager about their services.
LEARN MORE: AN OVERVIEW OF SECURITY DEPOSITS IN CONNECTICUT
LATE FEES:
There are also changes to the amount landlords can charge for overdue rent fees.
With Nexus, and most professional property managers, software is utilized to remind tenants that rent due is coming up (typically the 27th of the preceding month), and then to provide an alert each day that it is late. In Connecticut, tenants are given a 9-day grace period and no fees can be enacted within that time period. If payment has not been received by day 10, fees can then be charged, based on the following guidelines:
- Up to $5/day (maximum $50)
- 5% of the overdue rent
- 5% of the tenant’s share of rent if in a rental assistance program
The catch is that you need to take whichever is the lowest of the three. As a baseline, Nexus has a default of $50 as this will be the most common charge. For 5% of overdue rent to be less than $50, rent would have to be less than $1000, which is not unheard of, but it’s not typical these days. And if you are working with a tenant in a rent aid program, you’ll be well aware of it due to other documentation and requirements, so that won’t sneak up on you. Nonetheless, all landlords need to be aware of this change, which like many of the others, begins October 1, 2023.
LEARN MORE: WHY LANDLORDS SHOULD NEVER ACCEPT CASH FROM TENANTS
CONCLUSIONS
Due to the current market and an increased focus on rental properties during the pandemic, lawmakers are more active than they’ve been in years when it comes to housing policy. Low supply, high demand, and historically rapid increases in interest rates have created a strong rental market, which means even more eyes are on landlords. Whether this increased focus existed or not, it would still be the right time to hire a professional property manager. Having someone on your side to help you collect passive income while ensuring your property and tenants are taken care of creates a win-win relationship that we all want in our lives. The fact that that expert can also insulate you from oversight of changing legislation and the potential for stiff fines makes the case for hiring a property manager that much stronger.
NOTE: There is more in this new legislation than just what was covered here: LEARN MORE
CONTACT A NEXUS PROPERTY MANAGEMENT FRANCHISE OFFICE IN THE FOLLOWING AREAS TO LEARN MORE:
Pawtucket RI Property Management Office
Worcester MA Property Management Office
Natick MA Property Management Office
New Haven County CT Property Management Office
Tempe AZ Property Management Office
Fall River MA Property Management Office
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WHO IS PROPERTY MANAGEMENT FOR?
Mick Lefort is the Owner / General Manager of Nexus' New Haven County Franchise Office and the Vice President of Operations for Nexus Property Management®. A National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.
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