The City Council of Knoxville, Tennessee is considering a property tax freeze for some apartment owners. Property owners who choose to participate in the program will be encouraged to keep rents affordable for low- and moderate-income households. Given that property taxes can be one of a landlord’s biggest expenses, this proposal could provide significant relief for property owners. They may or may not choose to pass those savings on to renters.
Unlike other cities that are imposing restrictions and controls on landlords, Knoxville is attempting to solve the housing crisis in a non-coercive manner. The proposal would not compel landlords to enter the program or keep rents affordable. It is, as one government official put it, an incentive. While a tax freeze won’t solve the housing crisis all by itself, it is one step in the right direction.
Many politicians like to blame landlords for rising housing prices. They then impose rent control and other “tenants’ protections” while ignoring the role that property taxes play in driving rental prices higher. Those same politicians have the power to reduce landlord costs by instituting property tax freezes. That, however, would mean less revenue for the government’s insatiable spending.
Since renters vastly outnumber landlords, coddling tenants with “renters’ protections” is often an effective way to garner votes. But those laws do nothing to increase the supply of affordable housing. Instead, they provide disincentives for more housing to be produced.
Landlords and developers are the one producing and providing rental housing. Politicians, tenants, and housing activists would be well-served to recognize this fact. The affordable housing crisis won’t be solved by continuing to treat housing producers as enemies. At least one city seems to realize this.