How do High Rental Rates Affect Low-Income Families?

Picture this, after living in the same place for three years, your landlord announces a new rental rates that puts extra financial strain on your family.

Despite not keeping up home renovations, they explain the increase is necessary because of the economy. With your merger salary barely covering the former rent plus groceries and healthcare, you now have two choices, downscale to a more affordable but less conducive apartment, or cut back on more essentials.

Unfortunately, this scenario is a harsh reality for many people, and this article explores how high rental rates affect low-income families. Continue reading our article below to see potential solutions that could provide insights on how renters can survive this situation.

Impact of High Rental Rates on Low-Income Families

Limited Housing Options

For starters, high rental rates affect families’ housing options. During the tenant screening process, it’s common for landlords to do a background check on your employment and income status, to confirm you can keep up with the rent. As a result, people from low-income backgrounds are less likely to qualify for high-quality apartments in good neighborhoods with amenities that make their lives easier. Instead, this leaves them no choice but to settle for overcrowded, unsafe, and poorly maintained housing in less savory neighborhoods.

Increased Risk for Eviction

If rent already takes up a huge chunk of your paycheck, a small increase could potentially ruin your financial plans and set you back with your personal financial goals. In such a scenario, you may have to choose between paying your rent and food, and if you can’t find alternative accommodation within the notice period, you risk marring your rental history with an eviction.

On the other hand, an unexpected medical emergency or job loss can also cause severe financial strains with the same eviction outcome. As a result, low-income families are more likely to relocate, which can disrupt their children’s schooling and even employment stability. However, remember you can negotiate with your landlord before agreeing to the yearly rent increase.

Greater Financial Strain

Another negative impact of high rental rates is that it puts families in a position to choose between their essential needs. There’s only so much you can afford on a limited salary, and with the cost of housing and feeding outstripping wages by miles, it’s hard to conveniently pay for both. Even when you can still afford groceries, the financial strain can come in other ways that inconvenience your family, like having to walk in the cold instead of taking the bus to save money. A more common example for most low-income families is not being able to afford a comprehensive healthcare plan, and having to pay out of pocket for complex medical procedures that can be financially draining.

Potential Solutions to Address the Issue of High Rental Rates

Implementing Rent Control Policies

Stabilize housing costs with rent control policies that prevent low-income families from price gouging. For example, when a neighborhood starts undergoing gentrification, where investors start building high-class homes and there’s an influx of wealthier tenants, it’s common for existing landlords to want to cash in on the trend.

As a result, they could price out their long-term but low-income renters with a sudden hike that exceeds their income. Resulting in forcing them out of their homes to accommodate better-paying tenants, while renters find a home that aligns with their budget. However, rent control policies restrict how often and by what percent landlords can increase their rental rates, which prevents such displacement. If you live in an area with such policies in place, you can work with a reliable rental manager in Baltimore to discuss discrepancies in the rent price.

Provide Rental Subsidies

Another solution that could benefit low-income families is providing government-funded rental assistance. By covering a portion of their rent, these programs could help long-time tenants stay in their homes while allowing landlords to earn sufficient income to cover maintenance. As a result, these subsidies can go a long way in bridging the gap between current market rates and what low-income families can afford.

Increase Supply of Affordable Housing

Incentive development of affordable housing can increase low-income families’ options and access to comfortable and conducive homes. For example, if the government were to provide tax breaks to developers that specialize in building affordable units, it could increase the construction of multi-family housing in several cities. That way, supply could easily match or even outstrip demand, forcing rental prices to remain reasonable and accommodating to economically disadvantaged families.

Conclusion

Navigating raising rental rates can be significantly challenging for both landlords and tenants. For families with a limited financial budget, it can affect their housing options, increasing the likelihood of settling for poor accommodation. Aside from that, they also face a higher risk of eviction and housing stability, and this reality can make it more difficult to afford essential needs.  Addressing this issue requires a combination of rental control policies and rental subsidies. These solutions could go a long way in providing immediate relief to such families while ensuring that housing increments remain affordable.