LA cities have programs for landlords to get around rent control. But they’re rarely used

In Southern California, rent control caps are never absolute. To be legally compliant, cities with rent control must give struggling landlords a way to raise rents above what local limits typically allow.

But LAist has discovered through a series of public records requests that few landlords are applying to these programs, and even fewer are getting approved.

For example, in the city of Los Angeles — home to about 650,000 rent-controlled apartments — landlords have filed 242 applications to the city’s Just and Reasonable Rent Adjustment Program since 2013.

The city has approved only 22 of those applications.

Keep up with LAist.

If you're enjoying this article, you'll love our daily newsletter, The LA Report. Each weekday, catch up on the 5 most pressing stories to start your morning in 3 minutes or less.

Subscribe

For landlords subject to rent control, the right to a “fair return” on their investment is enshrined in court rulings. Local fair return programs give landlords a way to show the city their investments are being harmed by rent control, and in turn receive approval to raise rents on their tenants more than would usually be allowed under local caps.

If landlords say they’re being harmed by rent control, and they stand to benefit from these programs, why are so few applying?

The answer depends on who you ask.

Landlord groups say cities have stacked the deck against them by making the process of determining appropriate rent increases far too complicated.

“I always kind of joke that it would take an army of accountants and lawyers to be able to run through that calculation, only to go in front of a board who would review it, and would really not have much sympathy for a property owner,” said Dan Yukelson, executive director of The Apartment Association of Greater L.A.

Renters and tenant advocates have a different explanation.

They note that these programs only exist to help property owners who can show, through specific financial records, that they’re not earning a constitutional fair return on their buildings. In pricey L.A., the vast majority of landlords are making plenty of profit, they say.

“If this type of landlord were to apply for a fair return increase, they would not qualify,” said Chelsea Kirk, director of policy and advocacy for the non-profit Strategic Actions for a Just Economy.

“Landlords will of course go to City Hall and say they're not earning a fair return, or they're not making as much money as they need to stay in business,” Kirk said. “We don't see them utilizing these kinds of programs because when the time comes for them to actually demonstrate it, show us the proof, not just say it, they can't do it.”

The numbers from different cities

LAist filed California Public Records Act requests with some of Southern California’s largest cities with rent control. We found some jurisdictions receive more applications than others.

The County of L.A. — which oversees a rent control program that covers unincorporated parts of the county such as East L.A., City Terrace and Altadena — has received 63 applications since 2020. One has been approved for a fair return adjustment.

In Pasadena, where voters passed a rent control law in 2022, three fair return applications have been received so far and none have been approved.

Santa Monica has had rent control in place since 1979. The city has received applications for five buildings since 2013. The city did not provide data on the outcomes of those applications.

The cities of Santa Ana and Inglewood did not provide any data in response to LAist’s public records requests.

Should programs be overhauled?

Some lawmakers want to explore the potential for streamlining the application process.

L.A. City Councilmember Nithya Raman, chair of the council’s Housing and Homelessness Committee, recently introduced a motion to look into how other California cities handle their fair return petitions. This comes on the heels of the council lowering the city’s rent control caps.

“Part of it is that landlords are correct that the housing department can sometimes be a challenging partner to work with,” Raman said. “The city should make it as easy as possible for both tenants and for landlords to engage with the housing department.”

One of the cities L.A. city staffers were asked to investigate was Cudahy. LAist found that in recent years Cudahy has received one fair return application. It was marked incomplete and withdrawn.

On its website, the city of L.A. says it expects landlords seeking fair return adjustments to provide financial documents on their buildings going back to 1977, around the time the city first implemented rent control.

Landlords say requiring nearly 50-year-old paperwork is onerous.

“Owners don't have documentation that is that old,” said Yukelson with the Apartment Association. “They may never have had it, because they just acquired the property well after the base year.”

Sharon Sandow, a spokesperson for the L.A. Housing Department, told LAist the city requires landlords to provide two years of financial documents showing they are not receiving a fair return. She said city officials realize that not everyone has records going back to 1977, and in those cases, landlords can instead provide the oldest financial documents they have available.

A closer look at landlord profits

The Economic Roundtable, a local research nonprofit, produced a detailed report on the city of L.A.’s rent control program in 2024.

The researchers found that on average, 35% of the rent L.A. tenants pay goes to building operating costs, such as maintenance, utilities, insurance and payroll. Landlords can use the remainder to cover their mortgages and turn a profit, the report concluded.

The report also found that between January 2020 and January 2023, during the height of the COVID-19 pandemic, about 40% of L.A. apartments became vacant.

Shanti Singh, legislative and communications director for the nonprofit Tenants Together, said vacancies matter to landlords because rent control caps only apply to existing tenants. Under California law, rents in empty units can be re-set to market rates, boosting profitability.

“I think sometimes people forget that,” Singh said. “A lot of rent-controlled units can still be on the pricier side, like at market rate. So those landlords really have nothing to complain about.”

But for other landlords, who have seen little turnover in their buildings over the years, rents can be significantly lower than market rates.

Raman, the L.A. councilmember, said she’s heard both arguments: that the application process is too complicated, and that landlords simply don’t need help. She said she wants to better understand what’s really going on.

“I'm hoping that this motion allows us to investigate which of these is true,” she said, “and how, if it is bureaucracy that's preventing landlords from being able to do business in the city, we can make it easier and fairer.”