There have been multiple cases of rent control laws being proposed over the last few years.
It seems to largely be in response to the discount and rate management strategies that have become common as the market has become more competitive.
Are there any new ones to keep your eyes on now, though? Take a listen as Scott Zucker chats with Tommy and Melissa about rent control and what's on the horizon.
Question: "Are there new laws or regulations for raising rent in self storage?"
Check out the video clip below to hear their answers:
In this Gabfocus Session: 2024 Storage Legal Update, Scott Zucker (Weissmann Zucker Euster + Katz, P.C.) gave Tommy, Melissa, and the rest of us a run-down of the current self storage legal landscape.
Check out the full Session to dive deeper!
Don't want to watch the clip? Here's what Scott had to say:
Joe's been battling where they come in on these rent control legislative efforts because the noise that's being made out there from customers about these rent increases.
So in reaction to the noise, the legislators have tried to put rent control measures in place in self storage to control either the number of increases that can happen or as well the percentage of increases that could happen in a self storage landlord-tenant relationship.
So far the SSA, through their state lobbying efforts, have been able to defeat those provisions. Namely, New York is one example of the pushback to that rent control effort.
But Melissa, you raise a general anxiety concern that's out there, which is with all these rent increases happening across the country, is there a risk that the noise will lead to other legislative efforts to create rent control?
And the answer is yes.
So how do you stop the noise? I'm not suggesting at all that self storage operators cannot raise their rents. I believe wholeheartedly that the reality of month- to-month self storage leases gives operators the flexibility of raising their rents to cover their costs and make a living in the businesses that they operate for self storage.
And I know that your real estate taxes are going up, your insurance costs are going up, your labor costs are going up, your legal costs are going up. I mean it's expensive to be a self storage operator and the only way you're going to make a living is, really is how you charge your tenants for those costs.
So I'm not against that at all.
What I'm against is the surprise and discomfort that your customers may feel if they don't understand and know about rent increases. So does your rental agreement clearly provide that you have the right to change and increase your rent by notice?
So please have that in your rental agreement.
Does your website clarify in the terms and conditions that rent is subject to change with 30 days notice? Do you notify your customers on any rent concession or concession deals or discount deals that, that rent discount is only for a limited period of time and then after that expires that the higher rate will be into effect?
Is it clear so that a customer who's renting from you is not surprised by that jump in rate after the discount burns off?
That's where the problem comes. It's the lack of communication.
If you are an operator that's sneaking rent increases into your customer, you're the bad actor that people are talking about in the chat that's going to cause us trouble. You know, everyone wants to blame the REITs on rent increases of how they manage their, their systems to increase rent. If a customer doesn't want to pay those rents they don't have to rent from the REITs. They can rent from the mom and pops that are down the street.
That isn't increasing their rates. It's just the market and how it operates. So don't be upset about the larger companies increasing their rates, but be a good actor about how you communicate your rate increases and your discount programs to your customers. That's how we're going to solve the problem of legislative rent control."
—Scott Zucker
