A Review of State Rent Stabilization Statutes and Best Practices for Pennsylvania.
By: Robert Damewood, Cynthia Witman Daley, and Vanessa Raymond-Garcia
In recent years, manufactured home communities (MHCs, sometimes called mobile home parks) have faced growing issues as private equity firms have increasingly bought them up. These communities are often a good option for people looking for an affordable homeownership opportunity. However, when private equity firms take over, rents tend to be raised on the land where these communities are established, oftentimes making it unaffordable for long-term residents. MHC residents own their homes but lease the land, so rent hikes can force them to either pay higher costs or move, neither of which are good options. Moreover, private equity firms may cut services or stop maintaining the property to save money and increase profits. This can lead to poor living conditions, like rundown roads, broken utilities, and fewer amenities. Some firms might also even try to redevelop the land for more profitable uses, like building higher-end homes or businesses. This can displace long-time residents who might not have the means to move their homes or find other affordable housing. These compounding issues have made life more unstable for people living in manufactured home communities. The increased rent, poor maintenance, and threat of displacement have led to calls for stronger rules and protections for residents to help keep these units of more affordable housing available.
In Pennsylvania, a coalition of MHC residents called the Coalition of Manufactured Home Communities came together to fight these exorbitant increases. One MHC in eastern PA experienced a 48% rent increase over three years after being acquired by a private equity firm and one in western PA had a 42% increase in a single year. The Coalition has been working to propose a bill that would limit the yearly rent increases imposed by these owners. To aid the Coalition in designing an effective MHC rent stabilization policy for Pennsylvania, our staff member Bob Damewood conducted a state-by-state review of manufactured home community rent stabilization laws to identify best practices. This blog serves as a summary of that paper, highlighting the key points about why rent stabilization laws are important and how they fit within Pennsylvania’s legal framework. It aims to support the push for rent stabilization policies that can help protect vulnerable communities across the state.
Regulating rent increases in MHCs has become an important topic as this kind of regulation aims to balance the homeownership interests of MHC residents and the ability of property owners to earn a reasonable profit from their land. The idea is not to prevent property owners from benefiting from their investments, but rather to control how and when rent increases happen so they are gradual and manageable for residents. The state-by-state review conducted by RHLS staff includes the following 12 states. Arizona, California, Delaware, Florida, Iowa, Kansas, Massachusetts, Nebraska, New Jersey, New York, Ohio, Oregon, Rhode Island, and Vermont. While many local ordinances exist across the country, this analysis did not include them.
The states with rent reasonableness laws have adopted different policies. Some states set an absolute cap on how much rent can increase – or a maximum percentage/amount, while others require owners to justify any rent hikes. In some areas, residents even have the ability to challenge rent increases. If the increase goes beyond the cap or isn’t properly justified, residents have tools at their disposal like barring the increase, reducing it, or requiring the owner to pay penalties. In some cases, like in New York, a court may modify the increase. Other states, like Arizona, may require the owner to cover relocation expenses for residents if a rent hike exceeds a set limit.
Many states use the Consumer Price Index (CPI) as a basis for determining rent increases. This is a measure of inflation that tracks the cost of goods and services in urban areas. It covers everything from housing to energy costs. Some states, like Vermont and Arizona, allow for an enhancement of the CPI, which means the rent could increase by a little more than the CPI itself. For example, Arizona might add up to 10% on top of the CPI. Other states have formulas or flat percentage increases for rent increases. In Delaware, the cap can vary depending on the inflation rate, while New York requires a 3% minimum justification for rent hikes.
States also handle capital improvements and health and safety issues in different ways. Most states include capital improvement costs, like fixing the property or upgrading it, within the rent justification rules. Some states, like Vermont, allow owners to add a temporary surcharge for improvements, but residents can challenge these increases just like any rent hike. When it comes to health and safety, some states have strong protections. For example, in Delaware, owners cannot raise rents if there are unsafe conditions, and they must fix those issues to avoid penalties. New York takes a similar approach, where courts may require health and safety violations to be corrected before allowing rent increases.
The process for reviewing rent increases varies. In many states, residents or a majority of residents can request a review. This may include meeting with the owner, going through mediation, or even filing in court. Owners must provide documentation to residents, including details on operating costs and comparable market rents. In some states, like Vermont, the state even provides legal representation to residents to help them through the process. Some states even have extra protections for vulnerable groups, like elderly or disabled residents. For example, Delaware caps rents for these residents at 30% of their household income and limits how much their rent can increase. These policies help make housing more affordable for people who may have limited income, ensuring that rent increases don’t force them out of their homes.
As a result of this multi-state review, RHLS and its partners with the Coalition propose a “rent justification” rule. This would allow a small yearly rent increase, like 3%, or use a formula based on the cost of living. If the rent needs to go up more than that, the owner must show a valid reason, like higher costs for taxes or utilities, and have a neutral expert review the increase. Owners would need to give residents a detailed explanation before raising rent so they can decide if they want to challenge it. There should also be a way for residents to appeal the decision. The rent rules should cover all charges, including rent, fees, and service costs. If a property has health or safety issues, rent increases should not be allowed until those issues are fixed. Residents should have the chance to buy the property if the owner decides to sell, helping keep the community stable and giving the owner a fair price.
The Commonwealth has a valid public interest in protecting the housing stability and property rights of homeowners in MHCs, especially with recent changes in MHC ownership that have caused lot rents to rise quickly. Putting in place reasonable controls on rent increases would directly support this goal and help address the issue. We hope that you will download and read the report.