L.A. County wants to cap rent hikes at 3%. Landlords say that would push them to sell

LOS ANGELES, CA - OCTOBER 03: Supervisor second district Holly Mitchell at County of Los Angeles Board of Supervisors meeting. County of Los Angeles Board of Supervisors on Tuesday, Oct. 3, 2023 in Los Angeles, CA. (Irfan Khan / Los Angeles Times)
L.A. County Supervisor Holly Mitchell, who on Tuesday pushed forward a motion to cap rent hikes at 3% for many renters in unincorporated parts of the county. (Irfan Khan / Los Angeles Times)

A proposal that aims to spare tens of thousands of tenants in Los Angeles County from significant rent hikes moved forward Tuesday despite outcry from some landlords.

The L.A. County Board of Supervisors voted 3 to 2 to ask staff to draft a change to rent stabilization rules. Under the proposal, many landlords in unincorporated L.A. County would be barred from raising rent by more than 3% a year. Small property owners could increase rent by up to 4%, while owners of luxury units would be capped at 5%.

The supervisors will need to vote again on the proposal before it can become law.

L.A. County Supervisor Holly Mitchell, who spearheaded the proposal, said it is intended to keep housing affordable for renters without squashing the ability of mom-and-pop landlords to survive.

Some of those landlords, however, say that rising insurance costs have pushed them to the brink of selling their properties.

“My goal — always — is to slow the tide of the corporatization of rental property ownership across L.A. County,” Mitchell said at Tuesday's board meeting. “When that happens, affordability goes out the window.”

The cap would apply to all rent-controlled units in unincorporated L.A. County. There are roughly 51,700 of these units, all of which were built before 1995, according to a recent study commissioned by the county. Most are in East L.A., South L.A. and the San Gabriel Valley.

The majority of supervisors also agreed to extend a temporary 4% cap on rent increases in unincorporated areas through the end of December. The permanent 3% cap, if passed as envisioned by Mitchell's office, would take effect after that.

The push to change the county’s rent stabilization rules yet again was met with skepticism by Supervisors Janice Hahn and Kathryn Barger, who voted against the proposal. They said they were worried that the government was overburdening smaller property owners who rely on the rent to pay their bills.

“We’ve once again put these struggles on the back of landlords,” Barger said.

The county first adopted a rent stabilization ordinance in November 2019. That ordinance used a calculation based on inflation to determine the maximum amount a landlord could raise the rent.

The cap was never really put to the test. Four months after it passed, the pandemic hit, and the county banned all rent increases. As the pandemic ebbed, the supervisors approved a temporary rent hike cap of 3% — and then 4% — which they said was a way to keep residents from falling into homelessness.

In July, after multiple extensions of the temporary cap, the county was due to return to the original 2019 formula, which would have allowed landlords to hike rents by up to about 4.3% this year, and as much as 8% in future years.

A majority of supervisors said that returning to the old calculation would destabilize tenants on the verge of eviction. The proposal that Supervisors Lindsey Horvath, Hilda Solis and Mitchell voted to advance on Tuesday would cap rent using a formula based on the consumer price index — an amount they said couldn’t exceed 3%.

Any increase higher than that, tenant advocates warned, would be untenable.

“The majority of renters in L.A. County … often have to choose between making rent and other necessities,” said Christina Boyar, an attorney with the public interest law firm Public Counsel.

The California Apartment Assn., which represents apartment owners across the state, called the proposal “draconian."

“Rather than alleviating intense regulatory pressures, an unworkable policy is being considered,” Fred Sutton, the association’s senior vice president of local public affairs in Los Angeles, said in a statement. “This will exacerbate the housing crisis by discouraging investment in new and existing rental housing and ultimately hurt all residents.”

At Tuesday's meeting, landlords warned of a “tsunami of displacement” as rising insurance costs coupled with strict limits on rent have forced them to consider selling their properties. Some said they have tried for years to keep rent below market rate, but inflation means they now need more money from their tenants.

Bill Oswald, whose family owns eight apartments around Long Beach, said a corporate landlord recently contacted him about buying properties in the area. He said both his brothers urged him to sell, because of rising costs.

He said he is trying to hold out.

“I don’t think that corporations moving in and taking over these properties will help anyone whatsoever," he said.

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This story originally appeared in Los Angeles Times.