Can neighborhoods without HOAs slow down corporate landlords? | Raleigh News & Observer

CHARLOTTE

As the scale and impact of corporate landlords becomes more evident in Charlotte, local leaders and those affected are seeking solutions.

One of the most commonly discussed tactics is using the power of homeowners associations to limit rentals in neighborhoods.

Charlotte and Mecklenburg County officials have said they plan to support HOAs that wish to take such action, so far without any other concrete policy aimed at corporate landlords. The city has a map on its website showing roughly 400 HOAs in Charlotte.

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But what about the neighborhoods that don’t have HOAs?

An investigation by The Charlotte Observer and The News & Observer found that corporate landlords own more than 40,000 homes in North Carolina, including 25,000 in the Charlotte area. In Mecklenburg County alone, institutional investors own a quarter of all rental houses.

The investigation found dozens of complaints filed with the North Carolina attorney general claiming some of these landlords don’t respond to maintenance issues and charge excessive feeds, among other issues. Similar complaints emerged in interviews with tenants and neighbors.

Potters Glen in north Charlotte and Highland Creek, one of the largest subdivisions in the state, are among those communities whose HOAs have moved to restrict rentals for limited periods. To change bylaws, communities need approval of at least a majority of HOA members. Once the policies go into effect, new buyers in the neighborhood have to wait a year or two before renting, depending on the bylaws.

Another HOA tactic has been to restrict the percentage of homes in a neighborhood that can be rentals, said Tim Sellers, a Charlotte-area attorney whose firm works with HOAs. Sellers added that this restriction is more difficult to manage and is being used less often.

When there is no HOA

But many neighborhoods in North Carolina where institutional investors have converted homes into rentals are not protected by the covenants and bylaws of an HOA.

McClintock Woods is one of those.

The neighborhood, its leafy streets winding behind East Mecklenburg High School near Monroe and Rama roads, is consistent with the subdivisions built in Charlotte in the late 1960s and ‘70s.

It doesn’t look like the type of communities institutional investors have tended to prefer in the Charlotte area: vinyl-sided homes on smaller plots of land built after 1980, and many built in the 2000s.

Maybe for that reason, corporate landlords owned only five houses in McClintock Woods. Until recently.

On a chunk of land at the end of Coatbridge Lane, builder Kinger Homes is putting up houses on 14 sites, according to Mecklenburg County property records. Seven homes already have been sold. But instead of Kinger selling those homes to individuals who could become long-term residents, the houses went to a company called SFR XII Charlotte Owner 2 LP.

The Observer investigation found that the company is a subsidiary of Starwood Property Trust, an institutional investor that owns around 700 rental homes in North Carolina. On April 30, two of its houses on Coatbridge Lane were listed for rent for $2,795 per month.

Starwood buying rental homes in the neighborhood worries Steve Martin, who’s lived on Coatbridge Lane since the 1980s. Martin and some of his neighbors fear institutional landlords getting a foothold in the neighborhood and changing its character.

“I don’t have an issue with the folks moving in,” Martin said, adding he wants neighbors committed to the community. “We’re welcoming folks. What we like is people who want to live here and are going to be here for a while.”

But the many Charlotte neighborhoods without an HOA have little ability to take action if they decide they want to slow corporate landlords, who now own one in 20 houses in Mecklenburg County.

“In many of those instances we’re going to find that they’re out of luck,” Sellers said. “Under the law in the state of North Carolina, it favors everybody having free use of their property.

“Do what you want to do with it. Tires in the front yard, flamingos in the front yard, paint the door chartreuse, do what you want to do.”

Sellers said he’s worked with 20 to 25 area HOAs in the past couple of years that have voted to restrict rentals.

The single-family rental industry opposes HOAs taking such actions.

“I don’t think a homeowners association should be able to say you as a homeowner cannot rent,” said David Howard, executive director of the National Rental Home Council, a trade group that represents many of the largest corporate landlords. “I think that’s a slippery slope. And I think it’s not fair to helping consumers.”

Martin and his neighbors are less concerned about lawn flamingos and highlighter-tone paint than they are about local leaders having few policy proposals related to institutional investors, aside from encouraging HOAs to take action.

City and county officials have recently said they plan to offer support to associations that want to ban rentals. But that does little good for people, like those in McClintock Woods, without any such association to act.

Sue DuChanois, who also lives on Coatbridge Lane, said she worries that Starwood and other corporate landlords will use the increased presence in the neighborhood as a foothold to keep buying.

“My fear is that once they’re here that they’ll come for my house or my neighbor’s house,” she said.

This story was originally published May 03, 2022 6:00 AM.