4 Things You Need to Know About Rent Control
Los Angeles, California - Before we shorten this discussion with a “buzzed” article, let’s define rent control. Rent control only applies to a small set of apartments in certain cities. The term may imply that rent never changes. However, it actually means stabilization - establishing a small percentage by which landlords can increase the rent every year. The term may refer to a list of ordinances, laws, regulations or just the general application. In Southern California, rent control or rent stabilization topics revolve around Los Angeles city.
1. Rental properties built on or before October 1, 1978
In 1978, the city of Los Angeles signed its first Rent Stabilization Ordinance(RSO). The goal was to reduce vacancy rates due to a lack of adequate “decent, safe, and sanitary housing.” The vacancy rate at that time was approximate 3.8%. The RSO regulated apartments, condos, townhomes, duplexes, multifamilies, mobile homes, etc.
Update: LA city simplifies RSO residences with an online tool. However, it may not apply to all units within the same building.
2. Tenants’ Rent Protections
Rents may not be increased to market rate unless tenant moves out, does not pay rent, is evicted, violated lease agreement, evicted for non compliance to city ordinances, or accepts a Tenant Buyout Agreement. Without further review by the city of Los Angeles, rents may be increased up to 3% per 12 months. A few surcharges for registration, smoke alarms, etc are allowed but these make little difference. There are certain improvements to the property that allow owners to increase rent. However, they require board approval. Under the Capital Improvement Program, additional benefits that last 5 years or more could apply. Seismic retrofitting or removal of hazardous materials also apply. Any violations or overcharges will come under the authority of the Rent Stabilization Board where tenants may file complaints. Under extreme conditions, the city has the ability to take ownership over the building.
3. Tenants’ Eviction Protections
There are only 12 reasons listed by the city that allows a landlord to evict a tenant. If you have ever evicted had to evict tenant you will know the process from the first day of unpaid rent to the moment the sheriff is legally and physically onsite to do so is approximately 4-6 months.
Failure to pay rent
Failure to fix or address a violation of the rental agreement
Creating a nuisance or causing damage to the rental unit
Using the rental unit for an illegal purpose
Failure to renew a similar rental agreement
Failure to provide the landlord reasonable access to the rental unit
The person at the end of the lease term is a subtenant not approved by the landlord
The owner, or immediate family member will move into the rental unit
A resident manager will move into the rental unit
Demolition and permanent removal from the rental market
Government order
Conversion to affordable housing
4. The Arguments For and Against
In a free market economy, rates will rise if there is more demand than supply. The majority of economists argue against rent control and point to the fact that there just aren’t enough homes where people want to live. Those for rent control also have valid points rooted in morality, culture, and community. Gentrification is just a nice way of saying displacement. Without an excess of housing in areas people want to live, pricing is sure to continue rising. This will be an on-going issue for decades to come.