Owners of rent-controlled properties who evict their tenants and construct new rental buildings on their land must abide by new restrictions when setting new rents, according to an ordinance passed by the Los Angeles City Council on Tuesday.
The ordinance, which passed unanimously, closes a loophole in existing rules that allowed landlords renting out newly reconstructed buildings on the site of old complexes to set rent with no restrictions.
Josh Kamensky, director of communications for City Council President Eric Garcetti, said the new ordinance is aimed at protecting tenants.
“These are provisions that will allow middle-class families to remain in Los Angeles, to continue to live in the city where they work. These are the kind of policies we need if we want to keep an urban city,” Kamensky said.
Currently, buildings built before Oct. 1, 1978 are subject to the county’s Rent Stabilization Ordinance, which restricts landlords to being able to raise rents only once annually, according to limitations set by the Los Angeles Housing Department. Rent increases are currently limited to 4 percent a year, though this will increase to 5 percent on July 1.
Under the new ordinance, landlords, who have built new properties after evicting their tenants, have two options for how to approach rent.
The owner may set prices for units in the new building at market level but must regulate further rent increases by the Rent Stabilization Ordinance. Or, owners can designate up to 20 percent of the building’s units for low-income housing and set rent for other units without any restrictions.
There is also an exception to the new ordinance.
Properties with four or fewer units where the owner lives in one of the units do not need to follow these provisions, according to a press release from the City Council.
Kamensky said the original loophole resulted from a state law that allows landlords to stop renting residential property by converting it to commercial or for-sale residential property such as condominiums.
“Somebody could demolish property with the intent to get out of the rental business, and then decide to build a new rental building, which results in people losing affordable units,” he said.
Councilmember Ed P. Reyes said in a statement that the council looked for a solution to this problem that would benefit everyone involved.
“Our goal was to find something that was balanced and fair without penalizing the most vulnerable residents of this city, who are running out of options on where they can live,” he said.
But Ally Benas, a second-year international development studies student, said she believes rent stabilization is a good idea in theory but not in practice.
“When rent is artificially low, the demand is too high. Look at Berkeley ““ they have rent stabilization and it is (very difficult) to find an apartment,” she said. “The low-income housing part is a good idea, but it does not solve the whole problem.”
Other students, such as George Pai, a third-year women’s studies student, believe the ordinance is a good way to solve the problem caused by the loophole.
“It’s fair for everyone involved. The new ordinance is there for a reason: It is especially important for the students who can’t afford higher rents,” he said.
But Benas said she believes further solutions need to be found to solve the housing problem.
Kamensky said the council also believes they need to find more solutions to the housing problem, an issue they take very seriously. The council wants to build new units to benefit people at all income levels.
“We’ll definitely continue to address this problem,” Kamensky said.
Councilmember Bill Rosendahl said in a statement that he believes the ordinance is a step in the right direction.
“The new revision clarifies the rights of tenants and the rights of property owners. We now have more options to protect renters and preserve affordable housing,” he said in the statement.
CORRECTION: The Rent Stabilization Ordinance should have been described as restricting landlords to being able to raise rents only once annually, according to limitations set by the Los Angeles Housing Department. Rent increases are curr