New Long-Term Rental License in Denver — Here’s What to Do About It

Published July 12, 2022

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Denver is holding landlords to a higher standard, and that means more regulations. Rentals make up an estimated 37% to 50% of all Denver’s housing units, and demand is excessively exceeding supply.This competition for housing is creating a tricky situation for renters — they want to do anything possible to stay in their homes and avoid being displaced. And that often means:

Not reporting issues with the property
Living in an unsafe environment
Renting without a lease

To protect renters, the Denver City Council unanimously passed a new residential rental license law for long-term rental units: “Healthy Residential Rentals for All.”While the new law is a bit controversial (for landlords and renters alike), phasing began in January 2022 to start rolling the policy out. In short, landlords will need to:

Obtain inspection from a licensed professional (often between $300 and $1,000)
Purchase licensing ($50)
Provide copies of written leases to new tenants
Upgrade rentals to comply with habitability standards
Only raise rent once per year
Update lease with new rules around late fees, security withholdings, and more

We won’t sugarcoat it — it’s a lot.Some landlords won’t have any problem making this happen, but it can create a financial burden and difficult-to-fix situation for others (especially if you own an older property).Fortunately, you have options.Below, we’ll walk you through everything you need to know about Denver’s new residential rental property law. Then, we’ll explain what you can do about it.

What Is the New Residential Rental Property Law in Denver?

Denver’s new residential rental property law requires landlords to obtain licensing for long-term rental properties. Landlords will need to update their properties (to comply with habitability standards), pay for an inspection, pass the inspection, apply for the license, and hopefully be approved.Here’s a breakdown of what action landlords in Denver will need to take:

Get Your Rental Unit Inspected

You’ll need to find a certified home inspector to do the inspection. If you fail any items on the checklist, you’ll have to correct the errors and get a reinspection within 90 days. Fail to do so, and you’ll have to get another full inspection.Rental inspections can vary based on the type of unit and the number of units to be inspected. The average fee for a home inspection in Colorado is $400, but that price could jump as high as $1,000.

Purchase a Long-Term Rental License

Once you’ve passed your inspection, you’re ready to apply for a license. Application fees are $25 from January 1, 2022, to January 1, 2023, for landlords renting out 2 or more units. Landlords renting out single-unit homes will pay $25 for an application until 2024. After that, it’ll be $50.Here’s what you can expect to pay for licensing fees:

Single Unit: $50
Building With 2–10 Units: $100
Building With 11–50 Units: $250
Buildings With 51–250 Units: $350
Building With More Than 250 Units: $500

You need to renew your license every 4 years, and that includes a new inspection, too.

Upgrade Your Rental Property

Rental units must comply with the minimum standards for Denver dwelling units and obligations to maintain residential premises.The minimum standards are mostly what you’d expect, but a few troublesome nuances are scattered throughout. For example, multiple dwelling units in a basement require multiple escape routes. And every screen in your home needs to be free of any tears or small holes.Under the Warrant of Habitability, residential rental properties must include:

Working appliances
Waterproofed and weather-protected roof and exterior walls and unbroken windows and doors
Functioning heating, lighting, plumbing, and gas facilities
Running water and reasonable amounts of hot water (at all times) supplied to your fixtures
Common areas that are sanitary and clean
Extermination of vermin and rodents
Adequate number of garbage cans
Floors, railing, and stairways in good condition
Locks on all exterior doors and locks (or security devices) on windows that can be opened

Comply With New Regulations

The new licensing policy also comes with stricter regulations on what landlords can and can’t do. For example, you can only raise your rent once per year under the new law. This can make it challenging to get your prices up to market rate if you’re already behind.You also can’t charge a late fee until a tenant’s payment is at least 7 days late.These might seem like minor inconveniences, but they can add up — especially if you haven’t read all the fine print in the 4,000-word documentation.It’s a lot of work for landlords, but, fortunately, the law is being phased in slowly.

What You Can Do About It

You have a couple of options to consider.First, you could go through with making all the necessary updates, getting an inspection, and applying for the licensing. If that sounds like too much of a hassle and inconvenience, you have another option — and this one won’t take a penny.And it’s not selling your home.Selling your home will trigger an expensive taxable event, and that doesn’t even include broker fees, closing costs, home staging, and the like. After the sale, you might only walk away from your rental property with 2/3 of the equity.Instead, exchange your rental property for units in a portfolio of homes managed by Flock. You won’t have to worry about all these nitty-gritty regulations anymore, and you won’t have to fret about capital gains and depreciation recapture taxes.When you join Flock, you earn consistent passive income and capture upside potential. You get to avoid all the home-selling fees and defer expensive taxes — all while diversifying your investments and making your assets more liquid.Not a bad idea, right?Learn more about joining Flock and how it all works — we promise it’s a lot simpler than these new long-term rental property policies in Denver.

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