Are landlords ‘bad Christians’ when they raise rent?

Dave Ramsey stepped into a moral morass when he said rent should reflect the market, not tenants’ ability to pay

Radio host Dave Ramsey stepped into a moral morass when he said that landlords should be able to raise rent based on a property’s market value, not a tenant’s ability to pay. Raising rent on his rental properties doesn’t make him “a bad Christian,” he said.

But taking this position cast Ramsey as the villain in what has been called the world’s shortest play — the children’s skit in which an evil landlord harasses a tenant by saying “you must pay the rent” until a hero intervenes.

Ramsey, who says rental properties can be a means of building wealth, was talking about whether it’s justifiable for landlords to raise rent even if the change creates a hardship for the tenants and forces them to move. If tenants can’t afford the rent after an increase, the problem is their income, not the landlord, he said.

“I did not displace the person out of that house, if they can no longer afford it. The marketplace did; the economy did,” he said.

On social media, the comment landed particularly hard, coming as it did during a time of soaring gains in home prices, not to mention the ongoing pandemic.

But some people defended Ramsey’s stance, with one person saying, “Being a Christian no more obligates you to rent out your property at a loss than it obligates you to rent out your labor at a loss.”

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Ramsey elaborated on his position in the full exchange, which was in response to a question from a landlord in Washington, D.C., and was posted on YouTube Jan. 4.

He said that he manages his properties with both “a heart and a head” and takes extreme circumstances under account.  “Am I going to evict someone (with cancer) in the middle of chemo? No, I’m not,” he said.  Ramsey also said that treating others like we want to be treated is a biblical mandate, but so is being a good steward of assets we manage. The Bible does not say that businesspersons should “undercharge because we’re Christians,” he said.

That said, it’s one thing to set the price of a rental equal to market prices at the beginning of a lease; it’s another to significantly hike the cost of a rental when a family has been living there a while. To say, as Ramsey did, that the renter should just go find cheaper housing seems coldly dismissive of realities in today’s housing market, in which home prices and rental costs are rising, driven in part by a slowdown in new homes being built and also by a record number of investors buying single-family homes with cash. Also, in some cases, a rent increase also comes with a requirement that the renter pay a higher security deposit.

About 36% of Americans rent, and while their demographic profiles are diverse, racial and ethnic minorities and those with lower incomes are more likely to rent than to own homes, according to Pew Research Center. For those already struggling, a move may be as financially devastating as a rent hike, taking into account the costs of moving, the security deposit and the common requirement of paying the first and last month’s rent up front.

Moving to a less expensive neighborhood may also mean children have to leave the schools in which they are enrolled. It’s not as simple, or even as feasible, as Ramsey makes it sound.

On the other hand, inflation isn’t only hitting renters these days. Landlords, too, have expenses: taxes, insurance, maintenance and repairs. And despite the trope of the evil, mustachioed landlord snarling “you must pay the rent,” Pew reports, “Most rental properties — about seven-in-ten — are owned by individuals, who typically own just one or two properties.” In short, they’ve got people banging on their door for payment, too.

Still, homeowners who are paying more in taxes have greatly appreciated assets right now, while renters just have higher bills. Some renters have worse problems than that — the prospect of eviction in winter. The nationwide eviction moratorium expired in August, but some states, including New York and New Mexico, are still negotiating stays.

All of this means, there’s value in reading the room when talking about complicated issues, particularly when one resides a comfortable distance away from others’ pain.

Despite the Christian principles Ramsey embraces, and requires for his employees, Ramsey can be abrasive in his delivery. And with no apparent financial problems of his own (he recently sold his Tennessee estate for $10.2 million, reported), his words can often come across as cruel, as when he said last year about pandemic stimulus checks, “If $600 or $1,400 changes your life, you’re pretty much screwed already.” Whatever truth resided in those words, it was evicted in the delivery, just like his message about landlords and rent.