Should small landlords in LA be allowed to raise rents more than their corporate counterparts?

After Los Angeles moved to significantly lower yearly increases in most of the city’s apartments, some City Council members now want to change the rules again. This time, they’re hoping to give small landlords the ability to raise rents more than their corporate counterparts.

The council was scheduled to vote Tuesday on a proposal that would let small landlords — those who own 10 units or fewer — raise rents by an additional 1% each year. The idea was put forward by Councilmembers John Lee and Monica Rodriguez.

But during the meeting, Lee requested sending the proposal back to the Housing and Homelessness committee for a “more robust conversation.”

In a written statement to LAist, Lee said the two-tiered approach would recognize “the difference between a family that owns a few units and a large corporate operator. Our goal is to keep small landlords in the system and prevent the loss of rent-controlled homes.”

While the idea is gaining support from landlord groups, tenant advocates say the proposal would create a cumbersome and unfair system where some renters must pay more than others.

The changes coming for LA rent control 

In a culmination of years of debate, the City Council voted last month to lower the maximum allowable rent increase in the city’s rent-controlled housing to 4% per year. That’s down from the previous maximum of 10%.

Lee, whose district includes the northwest San Fernando Valley, voted against the changes after expressing concern about how the lower increases would affect the bottom line of small rental property owners. Rodriguez, whose district includes the northeast San Fernando Valley, supported the changes, but said more should be done to keep “mom-and-pop” landlords afloat.

“The motion proposes a modest adjustment to help ensure these small landlords remain viable, rather than being pushed out and accelerating the further corporatization of housing in Los Angeles,” Rodriguez said in a statement to LAist.

Landlord groups said the proposed 1% increase could help at the margins, but small landlords would still have to contend with insurance premiums and maintenance costs that have been rising faster than overall economic inflation.

“Throwing a bone in the form of an additional 1% to smaller owners is necessary but will be insufficient to keep many owners in the housing business,” Daniel Yukelson, executive director of the Apartment Association of Greater Los Angeles, said in an email. “More and more, owners are being forced to look for the exit ramp in the city of Los Angeles.”

Do small landlords really have it harder?

But researchers paid to investigate the issue have not found evidence that small landlords face stronger headwinds than corporate owners. A city-commissioned report by the Economic Roundtable, an independent research nonprofit, found no significant differences between the financial health of small and large landlord operations in L.A.

“The study found that, in general, small landlords are not suffering greater distress,” Anna Ortega, who is with the city’s Housing Department, said during a recent City Council meeting.

Tenant advocates with the group Keep L.A. Housed opposed the 1% bump for small landlords, saying it would be unfair to charge some tenants more every year simply because they’re renting from a non-corporate owner. The coalition also said enforcing the rules would be difficult.

“Allowing small landlords to self-certify creates the opportunity for abuse, as some will fraudulently claim the status and charge incorrect (and potentially illegal) rent increases to already rent-burdened tenants,” said Pablo Estupiñan, a Keep L.A. Housed member and an organizer with the nonprofit Strategic Actions for a Just Economy.

The rules in LA and beyond

The city’s rent control rules generally apply to rental units built before October 1978, though some newly built apartments are covered as well. About 70% of the city’s apartments are subject to the rent hike caps.

Some other Southern California jurisdictions with rent control allow small landlords to increase rents more than larger owners.

L.A. County allows small landlords in unincorporated areas to increase rents an extra 1%. The city of Inglewood allows owners of buildings with four apartments or fewer to increase rents by an extra 5% compared with owners of buildings with five or more units.