LA City Council is step closer to a rent increase cap on rent-controlled units

The Los Angeles City Council on Tuesday, Nov. 28, moved one step closer to approving an ordinance that would set a 4% to 6% cap on how much rent can be raised by owners of rent-stabilized housing units, starting in February.

The proposed rent increase cap on housing that falls under the city’s Rent Stabilization Ordinance (RSO) is intended as a compromise to permit landlords to raise rent for the first time in nearly four years – since the early part of the COVID-19 pandemic – while limiting the amount of the increase in hopes of preventing more tenants from falling into homelessness.

L.A.’s current rent hike freeze on RSO units – rental housing built before 1978 – was enacted during the pandemic to provide relief to renters, but the freeze will expire at the end of January. City Councilmember Hugo Soto-Martínez tried to extend the freeze, but could not get enough support from fellow councilmembers.

During a lengthy discussion two weeks ago, the council opted to move forward with a compromise proposed by Councilmember Bob Blumenfield that lets landlords raise rent on RSO units for the first time since March 2020, but caps the increase to 4% – or up to 6% if gas and electricity are included in the rent. The new approach would be in place through June 30, 2024.

Normally, the yearly rental increase on rent-controlled units in L.A. is tied to the consumer price index. If not for Blumenfield’s compromise proposal or an extension of the rent hike freeze, tenants would be looking at a possible 7% to 9% increase to their rent starting in February.

Both tenants and landlords are “not happy” with the proposal, Blumenfield said earlier this month, adding that it shows that the “compromise probably makes sense because both sides hate it.”

Roughly 75% of all multi-family rental units in L.A., or about 656,000 units, are rent controlled, according to the city’s housing department. On Tuesday, a spokesperson said the department did not have a readily available estimate of how many people live in the RSO units.

Tenant rights advocates have warned that lifting the rent hike freeze could lead to more evictions at a time when the city is already dealing with a monumental homelessness crisis.

According to the Los Angeles Tenants Union (LATU), which is planning a rally on Sunday at the Normandie Recreation Center not far from Koreatown, more than 4,000 eviction notices are filed in L.A. County each month – more than before the pandemic.

“What has gotten better for tenants since 2020? … Everything has just gotten worse for tenants,” said Tony Carfello, a member of LATU. “We are still living in the after-effects of that moment (in) 2020 when all the world shut down except for rents being due.”

Landlords said during recent council meetings that after multiple years of not being able to raise the rent, they need to be able to increase it to pay for maintenance and increased costs due to inflation.

Caspar Martin is the property manager for a six-unit apartment building that his in-laws own.

Although his in-laws aren’t relying on the rental income in their retirement, Martin said in an interview Tuesday that he thinks they need the ability to raise rent to cover ongoing building maintenance.

At one point in 2021, after the rent hike freeze went into effect, Martin said, the account in which all rental payments went had dwindled to just $3,000. “(My in-laws) were close to dipping into their own funds to keep this going,” Martin said, noting that in recent years, the family invested in improvements including remodeling the laundry room and making security upgrades to deal with homelessness.

Martin said he supports the compromise that Blumenfield proposed to cap rental increases to 4% to 6%.

“I think 4% is the minimum. Anything less than that is untenable,” he said, adding that a modest rent increase would allow landlords to save for major expenses like a roof replacement or dealing with a flood or other disaster.

James Lee, another landlord, said during the Nov. 8 council meeting that extending the rent hike freeze would be unfair to RSO property owners who have been subsiding tenants’ rents.

“We’re trying to survive. It’s really hard,” he said. “Our rent barely pays for the mortgage.”

Lee said that replacing a water heater four years ago would’ve cost him $900, but today, that cost would double.

On the flip side, Ana Carrion, a tenant in South Central L.A., said through a translator that many tenants will be at risk of eviction if their rents are increased.

Her family of seven lives in a rent-controlled, one-bedroom apartment. Carrion said she was in a coma for two months after contracting the coronavirus and continues to receive dialysis treatment for her kidney. As a low-income single mother she worries what will happen if her rent increases.

“I can’t sleep because I’m thinking about that,” she said.

Blumenfield’s proposal to cap rent hikes to 4% to 6% appears to be headed for adoption.

On Tuesday, the council voted 11-2 without discussion to support the ordinance spelling out the latest rent hike proposal. Council President Paul Krekorian and Councilmember Curren Price recused themselves from voting because they are landlords.

The proposed ordinance includes an urgency clause that allows it to take effect sooner than the typical timeline. That’s because housing providers are required to provide a 30-day notice to tenants about a rent increase, which in turn means landlords would have to provide notice by Jan. 1 for any rent hike to take effect on Feb. 1, said Kristine Cajulis, a spokesperson for Blumenfield.

Because of the urgency clause, the City Council needed 12 members, or a super-majority of the council, to vote for the ordinance this week in order for it to be adopted.

But since it was one vote shy of a super-majority, the council must take another vote next Tuesday. The item needs only a simple-majority vote to pass at that time.

City News Service contributed reporting.