Does restricting rentals make sense for your property association?
The answer to this question is nearly always a matter of debate because of the conflict of interest between owner-occupiers and investors. There are owners who think they should be able to manage their unit as they please, but their decision to rent their condo, and to whom, affects the rest of the building.
What Are Rental Restrictions?
Rental restrictions refer to a cap on the percentage of homes in a homeowner’s association (HOA) that the board approves for rentals. The percentage of units that can be rented varies by building, but 20% is one common number you might see.
Should HOAs Restrict Rentals?
Restricting rentals comes from the belief that something fundamentally changes about a building when most of the inhabitants are renting rather than owning. This comes from the idea that owners have a bigger interest in the property and are likely to take better care of the condo and building, as well as try to form closer relationships with the other inhabitants.
Thus, many HOAs choose to restrict rentals to reduce the number of times properties change hands in a given period. By lowering the number of units allowed to be rented out, HOAs introduce some stability in the building community.
Many HOAs, however, recognize the benefits of allowing rentals. Owners appreciate the flexibility of being able to rent their condo as-needed depending on what else might be going on in their lives. And some may argue that well-vetted renters are going to take just as good care of the condo as its owners.
In summary, whether restricting rentals is right for you depends very much on the type of people currently living in your community. And, since the HOA board is made up of owners in the building, the direction your building goes in will be determined by the underlying beliefs of the owners.
Have more questions about running your HOA or building more efficiently? At Hales Property Management, we offer Association Management as well as Rental Management services. With close to two decades of experience in Chicagoland properties, we have the knowledge to streamline your building’s operations!
