The purpose of this article will be to briefly outline why rent control is bad for Los Angeles residents and provide compelling reasons why rent control in Los Angeles should be repealed.
I have previously discussed rent control in Los Angeles, including posting the rent control law (pdf), permissible grounds for eviction under LA rent control (because you cannot evict a rent-controlled tenant without a valid, enumerated reason), Los Angeles rent control exemptions (which outlines the type of properties that are exempt from the rent control laws), eviction prerequisites to Los Angeles rent control, and many more rent control articles.
Without further ado, here are several compelling reasons why rent control in Los Angeles ought to be repealed.
- Investors and property owners don’t want to invest in Los Angeles properties because their investment return is severely limited. Rent control only allows rents to be increased by a certain amount each year, which is sometimes grossly disproportionate to market values. Why would an investor want to purchase a rent controlled property where his return is severally limited? While the city of Los Angeles continues to gain more tenants, there are less rentals available for rent because owners don’t want to be restricted by rent control laws.
- Because owners are restricted on revenues and rent that they can charge, the amount of funds that owners can use for such things as maintenance and repairs is limited. Landlords who otherwise would spend on improvements and upgrades are forced not to do so or face losing money because they are forced to keep rents low. This also lowers the value of the buildings and makes the property less attractive to buyers.
- Lower property values attributed to Los Angeles rent control laws means lower tax revenue for the government.
- Rent control is meant to take power away from landlords and owners. For example, a landlord cannot evict a tenant who is on a month-to-month agreement, unless the tenant falls into one of several “just-cause” reasons for eviction, many of which requires the landlord to pay the tenant several thousand dollars to move. Under rent control laws, if a landlord wants to move into his property, or simply doesn’t wish to rent the unit anymore, he must first pay the tenant several thousand dollars (which could be higher than $19,000.00). In some cases, if a landlord wants to move into the property himself, but the tenant is elderly or disabled and has lived in the property for more than 10 years, the tenant is essentially “protected” and cannot be evicted at all. A side effect is that this makes the value of the property decrease and makes it increasingly difficult to buy or sell. Why would a prospective buyer want to purchase a property that has a tenant in it at a very low rent and who cannot be evicted?
- Instead of letting free markets decide on what the rent will be, in many cases, rent control dictates how much rent a landlord can charge a tenant and by how much the rent can be raised. In a free market economy, supply and demand is supposed to make this decision. Not government regulation.
- Extensive rent control laws must be managed and governed. By its very nature, this means more government intervention and bureaucracy. The rental units must be registered. There needs to be a body to keep track of rental units, respond to complaints and alleged violations, manage tenant relocations, and more. The money for such a large bureaucratic government agency comes from funds collected from landlords/owners and tax dollars paid by residents of Los Angeles.
For more rent control, eviction, and other articles for Los Angeles landlords, keep reading this blog. Read David Piotrowski’s “Landlord Best Practices and Eviction Overview” book. If you need help with an eviction in Los Angeles, contact us today.
*Ideas from this article were obtained from this CAR handbook.