Apartment rental rates in the Augusta/Richmond County are skyrocketing. The main culprit for higher rents locally is a property tax increase that occurred in 2020 during the COVID-19 pandemic. Higher wages, an inevitable interest rate increase, higher utility costs and inflation all promise to cause rents to soar even higher.
The eviction moratoriums have also hurt many landlords and their ability to pay their mortgages and make a profit. Prolonged evictions due to the moratoriums hurt landlords financially. As the moratorium ends and evictions occur, landlords will have to raise rates on their replacement tenants to make up for what they lost in rent previously. The tenants who will eventually be dispossessed will hurt future tenants as well as themselves.
In a market like Augusta’s with already low supply and high demand, the property tax increase, coupled with the eviction moratorium, could not have come at a worse time for both tenants and landlords.
The apartment market in Augusta has seen a strong bump in rents in the years leading up to 2020. Historically, apartment rents in the area trended upward at a slow rate, matching the national inflation rate and adjusted cost of living index. In 2020 and 2021 the rent increases were far more severe, and there was a direct correlation to the county’s property tax increases. In fact, a quick survey of apartment complexes property tax bills reveals an average increase of 30% to 40% in 2020.
According to The Apartment Guide, the average rent in Augusta has increased from $649 in 2013 too $976 in 2021 an increase of 150% over the last eight years. Analyzing the data on a monthly basis, it’s easy to see the biggest increases occurred in April and October in 2020 and again in April 2021. Each of those months saw a 2% to 3% increase in just one month.
In April, landlords get their property tax assessment from Richmond County, and in October they get the bill. Those two months in 2020 saw large increases in rents because landlords had to make up lost revenue due to the bump in property taxes. The next big bump in rents occurred when 2021 bills were received and landlords who missed the 2020 bump caught up or when properties that had sold in 2019 were reassessed.
Just off Gordon Highway, The Creeks at Augusta apartment complex saw its tax bill jump from $38,809 to $51,711 in 2011, which was a 33% increase. Average rents at the complex were $658 in 2017 and are now advertised at $725 per month, according to rent.com.
In South Augusta, Peach Orchard Road Apartments, which was built in 2017, saw its property taxes go up from $172,000 in 2018 to $223,000 in 2019. The taxes bumped up again to $250,000 in 2020. The two-year increase was just over 45%. Rents at the property now range from $631 for a one bedroom unit to $856 for a three bedroom.
When rents go up, the landlords are often blamed. Reality for landlords is that most of them have a mortgage payment that must be paid monthly whether rent is collected or not. As expenses such as utility rates, property taxes and insurance increase, the landlord must pass that cost through to the tenants. When Augusta implemented the storm water tax, there was a direct correlation to higher rents then also.
The same applies to interest rates. Nationally, as interest rates rise due to governments monetary policies, the landlords who have adjustable-rate loans, which is most of them, have to raise rates proportionately.
If only one thing is gleaned from this article, I hope that it that people understand that every dollar a landlord pays in taxes is passed through to the tenant. This means every storm water fee, property tax increase, street light improvement, interest rate increase or income tax increase gets paid by the tenants.
As government raises property taxes to generate revenue to help less fortunate citizens, they often don’t realize they are actually hurting them.