A license to rent in Charlotte?

January 23, 2009

If you are the owner of a rental property or any real estate in the Charlotte-Mecklenburg County area, you should take note of the current actions and plans of the Charlotte Mecklenburg Police and the Charlotte City Council.  They are currently planning a Rental Property Ordinance that would have some extreme effects on anyone involved in renting property within the county.

To start, every property owner who rents a residential property would be required to apply for and obtain a license for renting property in the county.  The fee structure for this "business license" has not yet been decided, but any additional fee required to rent a piece of property should be considered a "tax."  This new tax could be based on rental income amounts or the number of properties rented or a fixed fee.  The proposed draft of this ordinance says that the "Rental registration fees shall be established annually, and shall be sufficient to enable the City of Charlotte to recover all costs associated with implementing and managing this ordinance."  This is still up in the air, but any additional tax for a rental property, would need to be added to the rent and would result in higher rent overall in our community.

The purpose of this license is to "minimize and control the adverse effects caused by illegal activities occurring on and in these properties" according to their current draft of the ordinance.  They want to make sure that the city is able to contact the property owners in "order to address disorder calls, health and safety code violations and statutory violations, as well as to implement remedial action programs."  So, although you may own a rental property and pay the real estate taxes that fund the police department to protect your interests, it appears that the city would like you to be responsible for your tenant's actions by getting in the middle of their potential illegal actions like domestic violence, drug dealings, etc.  I don't think this is an optimal situation and could create more problems than it solves.

Through some complex formulas, the policy will be tracking to see if your property is above average for crime calls.  If it is identified as being a high risk, you may be subject to setting a Remedial Action Plan with the police department.  This plan is required and if not agreed upon and completed with a specified period of time, the owner of the property risks having their license to rent revoked.

Then what happens?  Does the property go into foreclosure because you won't be able to rent it anymore?  Rental property owners are doing a service to the community by allowing those who are unable to purchase a home to have a place to live at an affordable rate.  Many of these rental properties are barely covering or do not cover their expenses.  Additional taxes and regulations would deter investors from purchasing real estate in Mecklenburg County and will increase the price of fair housing for those who are already unable to purchase a home.

I personally do not support this ordinance.  I am also a member of the board of directors of the Metrolina Real Estate Investors Association and the board opposes this ordinance and thinks it would have an unfair and detrimental effect for its membership. It appears this issue will be up for a vote in April or May at this point.  I strongly urge you to consider this ordinance and vocalize your concerns to the Charlotte City Council. Pass this information along to others as well since this potential ordinance has not received the media attention it deserves.

If you would like more information about this ordinance and the details, feel free to comment or contact me.

Donna Bordeaux is a Certified Public Accountant and Personal Financial Specialist with Bordeaux & Bordeaux, CPAs, PA in Lake Wylie, SC (a suburb of Charlotte, NC).  For further information about Donna or her firm, please visit www.charlottecpafirm.com.