Detroit offers landlords up to $30,000 to boost rental code compliance

In a bid to increase compliance, the city of Detroit will pay residential landlords to bring their units up to code.

Detroit City Council on Tuesday unanimously approved two contracts that, taken together, will provide $10,000 payments to mostly smaller landlords in the city, those owning just a few rental units. Landlords would take part in a federal Lead Renovation, Repair and Painting Program that helps property owners tackle lead remediation in aging homes.

Upon completing the program and then obtaining a Certificate of Compliance from the city, landlords could then apply for the $10,000 per-unit stipend and receive up to $30,000. The $1.8 million stipend contract is being administered by the Detroit-based Alan C. Young & Associates PC accounting firm.

Improving the low level of compliance with city regulations and removing some of the costs and barriers to doing so has been a stated goal of Detroit policymakers in recent years and is now in a pilot ordinance, as Crain’s has previously reported. An April memo from the city’s Legislative Policy Division estimated that only 16% of the city’s rental housing stock was in compliance; however, that number has doubled since 2021.

Between the ordinance amendments done last year and new incentives, “the percentages are (likely) to increase,” Rico Razo, the city’s chief of home repairs and neighborhood services, told Crain’s on Wednesday.

Razo said it’s estimated that at least 150 more housing units could be brought into compliance with the new stipends, but noted that the overall number will be dependent on the makeup of landlords who opt to participate and how many units they have.

In exchange for the stipend to help bring their units into compliance, landlords will be mandated to adopt affordability requirements — at least 80% of the area median income — for five years, Razo said. The goal is to make sure that landlords don’t simply make improvements and then raise rents.

Landlord groups applauded the new carrots being offered in Detroit, noting that other cities such as Grand Rapids have taken similar steps to address costly lead remediation and other environmental factors.

“I think more education for property owners in the city is always great,” said Erika Farley, executive director of the Rental Property Owners Association of Michigan, a statewide trade group for primarily smaller landlords.

Farley said the association promotes and encourages its members to be in compliance with local rules, but also acknowledged that complex regulations do make that difficult in many circumstances. It’s ultimately a three-way street, she said, with some share of responsibility falling on property owners, municipalities and tenants to keep landlords informed of issues at the property.