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Slumlord

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A slumlord (or slum landlord) is a derogatory term for a landlord, generally an absentee landlord with more than one property, who attempts to maximize profit by minimizing spending on property maintenance, often in deteriorating neighborhoods. Severe housing shortages allow slumlords to charge higher rents, and when they can get away with it, to break rental laws.

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As many of these neighborhoods are often populated by poor minorities, the term "ghetto landlord" has also been used. A "retail slumlord" is one who keeps a shopping mall in a bad shape until the government buys or confiscates it.

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The phrase slumlord first appeared in 1953, coined by Newsday Reporter Edward G. Smith, though the term slum landlord dates to 1893.

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Slumlord


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Traditionally, real estate is seen as a long-term investment to most buyers. Especially in the developed world, most landlords will properly maintain their properties even when doing so proves costly in the short term, in order to attract higher rents and more desirable tenants in the long run. A well-maintained property is worth more to potential buyers.

In contrast, slumlords usually do not contract with property management services, and do very little or no maintenance on their property (ordinarily, just enough to meet minimum local requirements for habitability), and in turn offer low rent rates to lure tenants who will not (or cannot) pay high rent (and/or who might not pass background checks should these be required to live in the higher rent areas). Slumlords of this kind typically prosecute many evictions.

It is not uncommon for slumlords to buy property with little or no down payment, and also to receive rent in cash to avoid disclosing it for tax purposes, providing lucrative short term income. (Thus, in the U.S., slumlords would normally not participate in government-subsidized programs such as Section 8, due to the requirements to report income and keep properties well-maintained.) A slumlord may also hope that his property will eventually be purchased by government for more than it is worth as a part of urban renewal, or by investors as the neighborhood becomes gentrified. In Johannesburg, regions suffering from urban decay frequently have landlords the government believes exploit their tenants, making them stay in buildings that don't meet fire codes. In Britain, local councils deal with private landlords; without adequate scrutiny this can result in landlords being able to fill properties below rental code with subsidized tenants.

Some slumlords are more interested in profit acquired through property flipping, a form of speculation, rather than rental income. Slumlords with this "business model" may not maintain their properties at all or pay municipal property taxes and fines they tend to accrue in great quantities. Knowing it will take years for a municipality to condemn and seize or possibly raze a property, the slumlord may count on selling it before this happens. Such slumlords may not even keep up with their mortgage payments if they become equity-rich but cash-poor or if they feel they can sell the property before it goes into foreclosure and is taken by their lender, typically a six to eight-month process at the quickest.

Black market renting

In places where with rent control and legal protection of tenants, some landlords may rent out properties illegally. For instance, in the UK there's illegal subletting of social housing homes where the tenant illegally rents out the home at a higher rent. In Sweden, rental contracts with regulated rent can be bought on the black market, either from the current tenant or sometimes directly from the property owner. Specialised black-market dealers assist the property owners with such transactions.

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People who have negative opinions of slumlords, hold them primarily responsible for causing declining local property values and for the eventual creation of whole neighborhoods of shanty buildings. Some say slumlords leech away the "wealth" of the poor with little regard to the future generations or the welfare of their current tenants. In effect, slum lording is a force considered exactly counter to gentrification. Whereas gentrification describes the result of a plurality of local landlords making decisive improvements to rental properties which add value to their rental units, justify hiking rent rates, eliminate less-affluent tenants and generally raise neighborhood property values, slum lording naturally results in a gradual general decay in living conditions, public safety, neighborhood prestige and ultimately property values.

Those defending slumlords assert that such property owners of poorly maintained declining-value properties offer a "valuable service" for those who care more about price than quality. Economist David Osterfield wrote, "... the slumlord, regardless of his motives, helps the poor make the best of their bad situation."

References

Slumlord Wikipedia


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