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Real Estate Economics • October 23, 2009

LA Rent Control Study: Greater Burden for Tenants, Greater Profits for Landlords

LA Rent Control Study: Greater Burden for Tenants, Greater Profits for Landlords
   

 

RenterWatch
By Larry Gross

A recently released study documents that over half of LA City tenants living in rent controlled apartments are paying unaffordable rents, while landlords who own rent controlled apartments have seen their profits skyrocket.

In September 2006, the LA City Council hired Economic Roundtable, a consulting firm, to conduct a comprehensive “Economic Study of the Rent Stabilization Ordinance (RSO) and the Local Housing Market.”

The Council also appointed an RSO Study Oversight Committee. The 7-member committee was selected from tenants’ rights and landlord organizations. Coalition for Economic Survival (CES) Executive Director Larry Gross, Legal Aid Attorney Barbara Schultz, and UCLA Professor of Urban Planning Neal Richman were appointed to the Committee to represent renters’ interests.

The Study found that the RSO covers 66% of LA’s inventory of rental units. However, the majority of LA renters are rent-burdened, paying over 30 percent of their income for rent, and roughly a third are severely rent-burdened, paying half or more of their income for rent.

Strengths of the RSO include that it covers a large segment of households in LA, most of whom are at low-income, and protects them from rent rouging and arbitrary eviction, while allowing owners a reasonable return on their investments.

Strengths of the RSO include that it covers a large segment of households in LA, most of whom are at low-income, and protects them from rent rouging and arbitrary eviction, while allowing owners a reasonable return on their investments.

Strengths of the RSO include that it covers a large segment of households in LA, most of whom are at low-income, and protects them from rent rouging and arbitrary eviction, while allowing owners a reasonable return on their investments.

• Much of the current housing scarcity emerged in the 1980s, a decade when LA’s population grew 17% but its housing inventory grew only 9% – about half of the population growth rate. In the following decade, population growth slowed but the margin of disparity between new residents and new housing remained the same.

• LA residents rent their homes at about double the national rate.

• The shift toward greater home ownership seen in New York and Chicago may also be seen in Los Angeles in the coming decade as immigrants who arrived in the 1990s continue to make economic gains and are increasingly able to buy homes.

• Since 1997, the increase in rents in the LA region has been much greater than the increase in other consumer costs.

• Price increases since 1997 for rental housing in the LA area have been 270% greater than increases in all other consumer costs.

• 58% of LA tenants are rent burdened, which means they pay more than 30% of their income to rent, with 31% being severely rent burdened, paying more than 50% of their income to rent.

• 56% of those with annual incomes of $35,000 or less are severely rent burdened, paying 50% of their income to rent.

• 27% of RSO tenants received illegal rent increases.

• 1/3 of all renters didn't know or were wrong about whether they were covered by rent control.

CES is an active member of Call to Action, which is an alliance of LA’s key tenants’ rights, legal services and tenant advocate organizations. A number of Call to Action group members have developed a platform of recommendations to amend the RSO based on the Study and has been meeting with Council Members and their staff, as well as mobilizing members to attend and testify at hearings in order to win support for these recommendations.

The Call to Action platform includes the following:

- Eliminating the minimum 3% annual rent increase floor.

- Eliminate the additional 1% rent increase where landlords pay for gas &/or electricity.

- Require landlords to register current rent levels of their units with the Housing Department.

- Oppose all additional pass-throughs that increase the rent burden to tenants.

Contact CES to become involved in this important campaign to strengthen LA’s rent control law.

(Larry Gross is the Executive Director of the Coalition for Economic Survival. More information on this report at www.cesinaction.org)   ◘

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