Tenants rally outside L.A. city hall to call for lower caps on annual rent increases.

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The city of Los Angeles currently allows landlords to increase rents above what’s permitted in other Southern California cities with rent control. Earlier this year, many L.A. renters received increases of up to 6%.

Now, L.A. renters and some city council members are pushing to lower those limits, saying the current rules are straining tenants who already stretch their budgets to keep a roof over their heads.

Landlords are fighting back in the wake of a nearly four-year rent freeze imposed by the city. They say further limits would be financially punishing as other costs are soaring, from insurance to maintenance and repairs.

How L.A. stacks up to other cities

Renters and lawmakers rallied outside L.A. City Hall on Friday morning, demanding a change to current rules that let landlords give rent-controlled tenants annual increases of anywhere from 3% to 8%, depending on recent inflation figures. L.A. landlords can also add another 2% to those rent increases if they cover a tenant’s gas and electric bills.

When City Councilmember Hugo Soto-Martinez took the microphone, he said he supports setting the city’s maximum annual rent increase at 3%. Councilmembers Nithya Raman and Eunisses Hernandez also spoke at the rally to call for lower rent hikes.

“Cities like West Hollywood, Pasadena, Santa Monica — even Beverly Hills — have better protections than we do,” said Soto-Martinez, himself a renter. “Hopefully we can line ourselves up with the cities that literally, many of them, border our own city.”

Currently, allowable increases in rent-controlled apartments are capped at 2.5% in West Hollywood, 2.75% in Pasadena, 2.8% in Santa Monica and 3.2% for most apartments in Beverly Hills. Those cities did not ban rent hikes as long as the city of L.A. did during the pandemic.

In February, based on current rules tied to inflation, the city of L.A. began allowing rent increases of up to 4% — plus another 2% for landlords who pay for tenants’ utilities. These rules apply to rent-controlled housing, generally apartments constructed before Oct. 1, 1978, which make up about three-quarters of all L.A. apartments. Newer housing is covered by a state law that forbids annual rent increases above 8.8% in rental housing built more than 15 years ago.

Cash-strapped renters call for changes

Tenants and renter advocates say L.A.’s rules, which have been in place since 1978, are out of line with other California cities and with the needs of renters. About 63% of L.A. households are renters, according to U.S. Census data. City officials estimate that the majority of those renters (59%) are paying rents considered unaffordable by federal government standards.

Denise Rivera, one of the tenants who showed up at the Friday rally, said she and her husband spend about half their income on rent for the South L.A. apartment where they’re raising four children. Rivera works as a rideshare driver, and her husband works in sanitation. She said they could not afford another big rent increase.

“It would put me, my children and my husband at risk of having to maybe move out of the city, or ending up in the streets,” Rivera said. “We’re trying to fight homelessness. It’s gotten out of hand. I think we have to make a change now.”

Some renters are still carrying debts from the pandemic, when job loss or deaths in families caused households to fall behind on their monthly payments. When L.A. launched a $30 million rent relief program last September, the city was flooded with applications calling for help clearing about $475 million in back rent.

Protections against eviction for households unable to pay expired in February. Eviction filings now have risen above pre-pandemic levels.

Landlords say they’re already struggling with today’s caps

Calls to lower the rent increases are being met with opposing calls from landlords, who say the city’s regulations have harmed them financially.

The city banned all increases in rent-controlled housing from the outset of the COVID-19 pandemic through Jan. 31, 2024. This rent freeze lasted much longer than other cities’ temporary bans on rent hikes.

During those years, L.A. landlord Rich Kissel said he watched as his insurance premiums on a 10-unit building rose by thousands of dollars each year. State Farm recently announced it will stop offering apartment insurance policies this summer across California.

Kissel said it wasn’t just his insurance costs that went up. He also faced higher trash hauling fees, spiking mortgage interest rates and rising maintenance and repair costs.

“Many people are under the mistaken impression that the rent gets paid and the landlord just puts all that rent money in their pocket,” Kissel said. “We have many, many bills to pay.”

Kissel recently sold another L.A. building to what he described as a “large corporation.” He said he feared lower rent caps, and potential requirements for landlords to electrify their buildings as part of the city’s decarbonization efforts, would make his profits vanish.

“The business model isn’t sustainable anymore, especially for a small player,” Kissel said.

Irma Vargas, a landlord who also works as a property manager for apartment buildings across L.A., said stacking the city of L.A. against cities like Pasadena is an apples-to-oranges comparison.

“L.A. has had rent control for over 40 years,” Vargas said, noting that many long-term tenants are paying well below market rates. “It’s a lot different than, let’s say, Pasadena,” where tenants have largely been paying market rents until very recently, Vargas said. Pasadena’s rent control law took effect in late 2022 after voters approved a ballot measure to cap increases.

When will rent hikes come up for a vote?

The L.A. City Council voted in October to commission a study of the city’s rent control rules. That study is now being carried out by The Economic Roundtable, an L.A.-based nonprofit research organization. The study is expected to come back to the council in upcoming months.

Tenant advocates want the city council to limit annual rent hikes to 3% — or 60% of the region’s most recent inflation rate — whichever is lower. They’ve also asked lawmakers to end the additional 2% increase for landlords who cover utilities, as well as the 10% upcharge landlords can impose when tenants add another member to their household.

Some lawmakers say rent increases don’t only impose a high cost on tenants — they can also impact the city’s budget to address homelessness. Councilmember Eunisses Hernandez said many low-income families are already on the edge, and large rent increases could potentially cause them to fall behind on rent and face eviction.

“We talk about our homelessness crisis almost every single day in city hall,” Hernandez said. “But we will not be able to truly solve homelessness until we stop the flow of people falling into housing insecurity.”

Source: LAist