COLUMBUS, Ohio (WCMH) – Until a landlord shows up with a hammer and nail to a tenant’s apartment, a new Ohio bill may ban them from buying another home to put on the rental market.
State Sen. Louis Blessing (R-Colerain Township) introduced Senate Bill 354 on Thursday, July 14, which would bar landlords or property owners with unresolved code violations or unpaid fines from bidding on a foreclosed home in Ohio, ostensibly to prevent lackadaisical or absent landlords from scooping up and neglecting future properties.
“Nobody should be able to keep houses in disrepute and then just decide, ‘Well, we’re gonna bid on more,'” Blessing said. “In my opinion, this is a huge win for the community because it forces bad actors to clean up their act if they want to get these properties for cheap at the foreclosure auction process.”
The bill is Blessing’s second legislative effort, he said, to combat the adverse effects that may come from out-of-town and private investment firms seizing single-family homes in Ohio – whether that be increased maintenance concerns or jacked-up rents.
In Ohio’s three largest cities – Columbus, Cleveland and Cincinnati – real estate investors funneled about $750 million toward purchasing single-family homes in 2021, according to an analysis by real estate company Redfin.
Those investors accounted for 16% of Franklin County’s single-family home purchases in 2021, more than double its rate six years ago, Franklin County Auditor Michael Stinziano told NBC4 in May. That percentage is even higher in majority-minority neighborhoods, he said.
“It is something that we feel is in response to the impact COVID and real estate market has had and where outside money is able to come in and make a big dent in the housing availability,” Stinziano said.
SB 354 “piggybacks” off of Blessing’s previous legislation, Senate Bill 334, which would force private investment firms to wait 45 days before placing a bid on a foreclosed home – giving local residents and nonprofits a leg up in the bidding process, he said.
“You start reading and hearing stories about people trying to buy homes and getting, you know, shut out because they lost to an institutional investor that was able to bid $50,000 cash above asking price,” Blessing told NBC4 in May.
For the first quarter of 2022, real estate investors were even more prominent, with one in four Columbus-area homes going to private firms, according to Carlie Boos, executive director of the Affordable Housing Alliance of Central Ohio.
The region’s housing shortage, coupled with what Boos called “the rise of the Wall Street landlord,” is breeding unsanitary and unsafe conditions for tenants.
The central Ohio region needs between 14,000 and 17,000 housing units each year, but in 2020, only about 10,800 units were built – a deficit that cannot accommodate the nearly 70 new residents that move to central Ohio every day, according to Jon Melchi, executive director of the Building Industry Association of Central Ohio.
With few housing options and soaring rent prices, Boos said it’s easier for property owners to take advantage of their tenants who often have no choice but to stay in their current living conditions.
“It creates an environment where property owners who are not maintaining their conditions still are able to operate and still are able to do business,” Boos said. “That’s why derelict, blighted properties can continue to attract desperate tenants. They have nowhere else to go.”
Code enforcement officers in Columbus responded to about 39,000 complaints in 2021, which could include anything from broken furnaces to unmowed lawns that pass the city’s 12-inch threshold, according to Cynthia Rickman, assistant director of the Department of Building and Zoning Services.
It is unclear how many property owners with existing code violations bid on foreclosed homes, but the Franklin County Sheriff’s Office said it sold 248 foreclosed properties in 2021. Blocking what Boos called “corporate slumlords” from purchasing foreclosed homes could lead to greater local homeownership, allowing residents to have a larger stake in their community, Blessing said.
“You read article after article about the odds of us reaching and going into a recession have increased, and I suspect that there will be more foreclosures coming online,” Blessing said. “I don’t want to see a repeat of the Great Recession where they came in and scooped them all up.”
SB 354 has yet to receive a committee assignment in the Ohio General Assembly, and SB 334 resides in the General Government Budget Committee. Lawmakers could consider the bills as soon as they return to session in November.