Denver Rental Licensing

The City of Denver approved the “Healthy Residential Rentals for All” program. This policy requires that all “dwelling units” used as rentals be licensed at least every 4 years starting no later than January 1st 2024. Like us, you may own rentals in Denver so we’ve been following this issue closely. Additionally, this program could become a “model” for other local cities to adopt. The program will roll out in three phases:

• Phase 1 starts January 1st, 2022, with early applications and licensing at a reduced fee ($25 per application instead of $50)

• Phase 2 starts January 1st, 2023 and requires licensing for any parcel with 2+ rental units (this applies to; duplexes, triplexes, quadplexes, apartment buildings, 2+ condo’s in the same building/complex…etc).

• Phase 3 will start January 1st, 2024, and requires licensing for any parcel with a rental dwelling unit (if one owner owns several parcels the licensing will be required for each parcel/dwelling unit)

The regular fee structure for licensing of each parcel will apply as follows:

• 1 Dwelling unit - $50 + Application Fee

• 2-10 Dwelling units - $100 + Application Fee

• 11-50 Dwelling units - $250 + Application Fee

• 51-250 Dwelling units - $350 + Application Fee

• 250+ Dwelling units - $500 + Application Fee

As part of the application process Denver requires each dwelling unit to be inspected by a Home Inspector (or at least 10% of the units when there are 2 or more units on a single parcel). This inspection is required to be shared with the City and will require that the property has passed all items on a checklist that has yet to be created or distributed to the public. The city expects this checklist to be available sometime this summer. Home inspections typically cost anywhere between $400-$800+ depending on additional services such as sewer scopes, radon testing, mold testing…or any number of health and safety testing that may be required. So far, the city has provided a vague guide for information on what the inspection checklist will include in the form of Denver Revised Municipal Code, Chapter 27. I can provide a link to this document or print and send to you if interested. Essentially this will set minimum standards for housing based on:

• Basic equipment and facilities (working appliances, existence of kitchens, bathrooms…etc.)

• Light, ventilation, heating and insect/rodent control (owner will not be in violation if the Program Manager determines that tenants and/or their hygiene are the cause of issues here)

• Supplied facilities in good working order (this mainly applies to amenities for large complexes)

• Prohibiting the disconnect of required utilities (except utilities disconnected due to non-payment from the tenant)

• Minimum space use and location requirement (unclear what this means)

Enforcement will be by the Program Manager. So far it is unclear how violations will be treated, however DRMC Ch 27 lays groundwork for forced demolition and/or liens on the property for the most serious of violations. The application, licensing fee and home inspection will be required every 4 years. There will also be a requirement to share a document called the “Tenants Rights and Resources” with all tenants. This document will be required to be posted along with any rent demands or notices provided to tenants. Unfortunately, this program - though well-meaning by the City Council - is likely to create a lot of unintended consequences for owners of rental properties and tenants alike. First and foremost, it will create a situation where mom and pop landlords will bear the majority burden of fees and other costs, while large apartment buildings skate by with relatively no added burden. These fees and costs to small landlords will most certainly be passed on to tenants in the form of more dramatic and frequent rent increases, especially if large improvement projects are required in order for rental properties to be deemed “inhabitable” by the city. This will create even more pressure on affordable housing when what we need is the exact opposite. The list goes on and on… I’m seeing that other cities (Boulder, Westminster) have, or are looking at similar programs as well as regulations for AirBnB type short term rentals. Wheat Ridge recently added licensing requirements for short term rentals. I’ll be following all of these closely so expect to hear more from me on this and other programs as new details emerge. In the meantime, if you do own rentals in Denver, it might be best to take a look at any deferred maintenance or other items at your rental properties that may require some attention over the next couple of years and before this program takes full effect. As always, I remain available any time to field questions or advise you to the best of my ability! If you are considering selling or trading your rental call me and let’s discuss the possibilities. If you are just curious about values for properties like yours, email or call me for a free list of recent sales in your neighborhood.