More than 5,000 landlords in December began the process of getting their Denver rental units licensed, by far the largest number of applications the city’s Department of Excise and Licenses has ever received in one month.
But the landlords who were hurrying to meet the Jan. 1 deadline to get into compliance may be waiting awhile to receive their licenses.
“The high number of applications means we’re just not going to be able to turn applications around as quickly as we have been,” said Eric Escudero, communications director for the department. “We’re not going to be able to turn them around in a week until we chip away at this backlog of so many applicants in one month.”
In November, the department received just over 1,900 applications for the new landlord licensing program, and in October, the agency received almost 1,400 applications, he said.
On average, it has taken about a week for each landlord to complete the licensing process, which includes hiring an inspector and then submitting proof of a passed home inspection in an application for a license to the city.
The residential rental licensing program is the city’s first large-scale attempt to make Denver’s rental units safer, after years of a rising number of complaints.
Landlords who rent more than one unit at one address in Denver were required to get a license from the city by Jan. 1, 2023. People offering single units for rent were required to get a license by Jan. 1.
So far, just over 13,600 landlords have been licensed through the program.
That means, 146,000 rental units in Denver are now located in properties that are licensed. And the estimated compliance rate for landlords who have received a license by the deadline is 27%.
The estimated compliance rate is low but city leaders are happy to see that 19,000 landlords have either applied for a license or received one 15 days into the licensing requirement, Escudero said.
“This is a monumental task to take on the largest expansion of required licensing in the history of Denver,” he said. “It’s going to take probably two to three years to get that compliance rate up to where we hope it will be.”
By comparison, about 82% of landlords of short-term rentals in Denver are licensed under a law passed in 2017, Escudero said.
“And we have a goal to have a similar high compliance rate for residential rental properties, which is why we are taking strong enforcement action,” he said.
When the residential licensing law passed in 2021, the city council estimated about 50,000 properties would require a long-term rental license. It’s unclear if that number is accurate, Escudero said, because this is the first time city leaders have ever attempted to count the total number of rental properties in Denver.
Improving Denver’s housing standards
The licensing program aims to ensure Denver renters know, before signing their lease, that their unit meets Denver’s minimum housing standards, which means the home has running water, is free of pests such as cockroaches and has other important features such as working fire detectors and that the home is safe from flooding.
“What we’re solving for today is making sure that renters know that when they’re paying their good, hard earned cash in Denver, that their unit is safe and that they can live in it safely,” said Stacie Gilmore, a city council member who helped pass the legislation to create the licensing program.
“And if there is an issue, the landlord has to go through the process to fix that and if they decide not to get a license for their property, there’s different ways that the city can hold them responsible,” she said.
Investigators at Denver’s Department of Public Health and Environment respond to complaints about residential health rules and regulations.
In 2023, the health department received 1,620 residential health complaints about rentals, owner-occupied dwellings, hotels, motels and shelters, up from 1,278 complaints in 2022, according to Amber Campbell, a spokeswoman for the organization.
In 2021, when the health department responded only to imminent and egregious hazards during the pandemic, 981 complaints were recorded, she said.
To get a license, a landlord must hire a third-party inspector, who meets specific qualifications, to look for problems such as black mold and broken thermostats.
If the property does not meet housing standards, the landlord won’t receive a license until the problems are corrected.
If a landlord is licensed and the Denver Department of Public Health and Environment finds an issue, the city can revoke or suspend the license until the landlord fixes the problem.
Landlords can be fined for operating without a license, starting at $150 for a first offense and rising to $999 per day, Escudero said. The health department also can impose fines, starting at $250 per violation and rising to as much as $5,000.
By Monday morning, the city had issued 381 fines so far totaling almost $85,000, Escudero said. It had also issued 1,870 notices of violation, or warning letters, to landlords of unlicensed multi-unit rental properties letting them know they have approximately 30 days to apply for a license before they’re fined.
“We’re seeing a lot of landlords who receive that notice of violation immediately take action and apply for the license,” he said.
The first landlord to get licensed
In March 2022, Joe Utterback was the first landlord to apply and get licensed in the program for a single-unit property, even though the license wasn’t required until Jan. 1.
Utterback learned about the licensing mandate through news articles and decided to start the process early on to avoid worrying about missing the deadline.
“I figured it would probably be easier to schedule the inspection before everybody decided to get this done,” Utterback said last week. “And once I got the inspection done, it didn’t make a whole lot of sense for me to sit around and not complete the licensing. It’s fairly easy to do step by step.”
Utterback hired Scott Home Inspection and the work was done within a few weeks.
There are 54 companies and individuals who have the minimum requirements and training the city requires to do home inspections for landlords in the program.
Lee Gonzalez, a certified master inspector and owner of Colorado Property Inspectors based in Denver, is one of them.
“When Denver first put out this regulation, we saw what certifications were needed and that we had most of them, and we began helping property owners, investors and management companies get licensed to obtain their Denver rental licenses,” he said.
Now, his company is inspecting eight to 12 rentals a day, six days per week. Rental inspections are 20 to 30 minutes long, he said.
Before the Denver licensing program launched, the company was inspecting one or two homes per week with each inspection taking three to four hours.
“There are times where we have to say ‘no’ because we have no availability,” Gonzalez said. “I still have clients calling because they just learned this Denver regulation is out there.”
The city requires the International Code Council R5 certification, one of the hardest certifications for an inspector to obtain, Gonzalez said.
“It’s four separate certifications in one, which consists of an electrical, mechanical, plumbing and building certification,” he said. “The test is more technical and in-depth.”
The difficulty of obtaining the certification will prevent many home inspectors from qualifying to register with Denver to inspect rentals, he said.
“You have to know what you’re doing,” he said. “Home inspectors, like any other tradesmen, have to be qualified.”
Workers who inspect rentals under Denver’s program check for working smoke detectors in every bedroom, water heaters that work at a minimum of 110 degrees and furnaces that blow at a minimum of 70 degrees, for example. They also check for broken windows, leaks and malfunctioning toilets and showers, Gonzalez said.
The wait time for an inspection by Colorado Property Inspectors is about a week, relatively short compared to the past few months when the wait time was about a month, as a flood of applications came in from landlords eager to meet the Jan. 1 deadline, he said.
“Right now, most of our calls are from people that weren’t aware of the deadline or this rental regulation,” Gonzalez said.
Most of the homes his company has inspected pass the test because Colorado Property Inspectors tells landlords what will be included in the inspection, which allows them to resolve any problems beforehand.
Most properties that fail inspections need to resolve smaller issues such as missing smoke detectors or a broken window, although Gonzalez said his workers have detected more serious issues, such as mold.
City of Denver leaders are focused on getting landlords into compliance now but their long-term goal is to create a safer Denver for all people who rent from a landlord, Escudero said.
As the city and its number of renters continues to grow, rent will likely continue to increase, as does the need for safer rental properties, he said.
Many of Gonzalez’s customers agree the licensing program is needed to maintain safe and healthy units for renters, he said. “Some of them don’t like this regulation, but they’re on top of it.”