Maximum Allowable Rent Increases in 2023 are Capped at Just 3% and New Permanent Restrictions on Evictions for Non-payment of Rent Place Further Obstacles On Rental Housing Providers Seeking to Collect Rent Due!
At yesterday’s, November 1, 2022 Los Angeles County Board of Supervisors meeting, the Board approved an ordinance with Supervisor Barger opposing, that includes numerous amendments to the County’s Rent Stabilization Ordinance (RSO), applicable to the County’s unincorporated areas. The ordinance was approved on consent with no Board discussion. As a procedural matter, the ordinance must be voted on a second time prior to adoption.
The action taken by the Board of Supervisors have both short-and long-term adverse implications for rental housing providers. The RSO amendments imposes a temporary, 3% limit on maximum allowable annual rent increases for rent stabilized units during 2023, and also new, permanent restrictions on evictions for non-payment of rent. The RSO amendments also include definitional clarification and substantive amendments related to (i) capital improvement pass-throughs-requiring that housing providers provide renters with the required written notice of an approved pass-through cost “at least thirty (30) days prior to collecting any pass-through cost”, (ii) further limitations on no-fault eviction based on owner-occupancy, and (iii) modifications to some of the relocation fee provisions.
The Association strongly advocated against these detrimental amendments which reflect the Board’s complete disregard of the plight of responsible rental housing providers and will led to greater scarcity of affordable housing in the County’s unincorporated areas as these changes make it nearly impossible for small independent owners to stay in the business of providing rental housing due to the inherent financial risks that are now involved.
We encourage members with properties in Los Angeles County’s unincorporated areas to review the full details of the ordinance and consult with an attorney regarding any related tenancy questions.
To review the full ordinance details, please click on the button below:
Summarized below are two key extremely harmful changes to the County’s RSO.
Temporary Rent Increase Limitation of Just 3%
On December 31, 2022, the nearly three yearlong ban on rent increases for rent stabilized units in the County’s unincorporated areas will end and only to be replaced with a new yearlong limit on the maximum allowable annual rent increase for 2023 set at a mere 3%. Rental units that are defined under the RSO as luxury units will be subject to a maximum allowable rent increase of 5%.
In a press release, Supervisor Barger stated why she believed that imposing the temporary rent cap was “the wrong move”, the financial impact on owners in the unincorporated areas, and how it will serve to worsen the housing crisis. Supervisor Barger also explained her no vote stating, “I can’t support policies that are unbalanced and shortsighted.”
Failure to Pay Rent Exceeding Monetary Threshold
The County’s RSO sets forth the just cause eviction requirements and the permissible reasons upon which a rental housing provider may issue an eviction. The Board’s actions permanently change at-fault eviction rules for failure to pay rent to a new requirement based on a failure to pay rent in excess of a specific monetary threshold.
This new monetary threshold requires that renters must owe more than an amount “equal to one month of fair market rent for the Los Angeles-Long Beach-Glendale, CA HUD Metro FMR Area (FMR), set annually by the U.S. Department of Housing and Urban Development (HUD) for 0–4-bedroom rental units, dependent on the type of rental unit occupied by the tenant”, in order for housing providers to proceed with an eviction. What this means is that a renter who has failed to pay the full monthly rent owed cannot be evicted if the amount they owe is less than the monetary threshold.
After the last several years of challenging rent collections resulting from the County’s eviction moratorium, this RSO amendment exacerbates the situation for housing providers by creating permanent barriers in the collection of rent due. Rental housing providers will now have to initiate claims in small claims court in order to collect rent owed that falls below the new monetary threshold and deal with the inherent challenges associated with collecting monetary judgments.
Original source can be found here.
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