LAX Leader

Permanent Cap on Future Rent Increases and Inclusion of Bad Faith Provisions Also Set To Be Adopted

At the October 17th West Hollywood City Council Meeting, the Council voted to adopt an ordinance that will finally end the City’s Rent Increase freeze on March 1, 2023, while also permanently reducing the Annual General Adjustment to a maximum of 3%, and instituting “bad faith” provisions that would subject rental housing providers to a misdemeanor offense for bad faith rent increases on non-RSO units. As the ordinance was approved on first reading, procedurally it must now be voted on a second time for formal adoption. 

The ordinance was approved on consent and with no Council deliberation. Prior to the meeting and during the meeting’s public comment period, the Association expressed strong opposition to the permanent cap on future rent increases, inclusion of “bad faith” provisions, and continuation of the rent increase freeze beyond this year. We have long called for West Hollywood to end the rent increase freeze immediately which will now be in effect for nearly three years, to March 1, 2023.

Expiration of Rent Increase Freeze

Since 2020, the City’s rent increase freeze has been in effect and prohibits rental housing providers from issuing any rent increases for rent stabilized units. With the March 1, 2023, end date, there is finally much-needed closure ahead even if the freeze will not have the immediate end the Association has tirelessly fought for and will be maintained longer than nearly all other local jurisdictions that have adopted similar measures.

Permanent 3% Cap on Annual General Adjustment (AGA)

The new permanent 3% maximum cap on AGA will apply to all future rent increases for RSO units. This is a significant reduction and less than half of the maximum allowable rent increases allowed under the current Rent Stabilization Ordinance (RSO). After having to deal with not being allowed to increase rent, constraints on rent collection and the pandemic for the past three years, this action from Council will surely leave already struggling owners at the brink of selling their properties or worse, foreclosure.

Prohibition of Bad Faith Increases

The ordinance also includes “bad faith” rent increase provisions applicable to non-RSO units which defines “unreasonable” rent increases, imposed for the purpose of causing the renter to vacate, as evidenced by increases “substantially” in excess of market rates for comparable units, rent increases imposed within six months after an attempt to recover possession of the unit, or “other factors” the Commission or court may deem relevant. No data was presented to warrant inclusion of these provisions which are extremely vague, expose rental housing providers of rental units that are not subject to the City’s RSO to potential frivolous litigation and possible criminal penalties for issuing otherwise lawful rent increases based on the presumption that such increases were motivated by “bad faith.”

We encourage members with properties in West Hollywood to review the full details of the ordinance:

ORDINANCE

Members should consult with an attorney regarding any specific questions regarding the ordinance’s applicability to a specific property or tenancy.

This article is for informational purposes only. If you have any questions regarding your property or specific tenancies and the requirements of any local law changes described herein, please consult with an attorney.

Original source can be found here.