Newsom temporarily changes rent rules for some LA mansions in wake of fires

Good news if you happen to own a mansion in West Los Angeles.

The post-burn ban on major rent hikes across Los Angeles now includes a carve out for houses with four or more bedrooms in ZIP codes with stratospheric rents.

The regulatory tweak, included in a lengthy executive order issued by Gov. Gavin Newsom on Tuesday, comes in response to a chorus of criticism from landlords, up-market realtors and housing policy experts who claimed that the state’s emergency prohibitions on rent “gouging” have been keeping some of the homes most proximate to Pacific Palisades off the market at the very time they are most needed.

As thousands of wildfire evacuees have scrambled for new places to live, Newsom, Attorney General Rob Bonta and Los Angeles Mayor Karen Bass have all repeatedly warned landlords against profiting off their desperation. Since Newsom’s first emergency declaration, armies of online sleuths have popped up to sniff out illegal rent hikes on rental listing platforms.

State emergency declarations regularly prevent landlords from hiking the rent by more than 10%.

But for units that haven’t been on the market for at least a year — and therefore lacking a baseline off of which to measure an “excessive” rent increase — the cap sets the rent at no higher than 60% above the area’s “fair market rent.” That figure is based on survey data analyzed by the federal Department of Housing and Urban Development.

In the city’s most coveted ZIP codes, 60% over the fair market rate just doesn’t cut it for many landlords and many of the would-be tenants are deep-pocketed enough to gladly pay the market rate, said Russell Grether, a Malibu real estate agent.

In the Malibu ZIP code of 90265, the rent cap on an off-market four-bedroom house works out to $8,912 per month. Grether said he would lease a property like that for $50,000.

“We have many clients who decided to not list their homes because they didn’t want to put themselves at risk and so, in a way, it had sort of the opposite effect of the intended purpose,” he said.

While Newsom eased up on one aspect of the cap with Tuesday’s order, he tightened down on another. Some landlords have been getting around the state-set rent caps by entering lease agreements that exceeded one year. Now the rules apply to all rental agreements.

The rules are set to expire on March 8.