- Los Angeles suffers from a shortage of residential rental property.Los Angeles Sign image by crossgolfing from Fotolia.com
In Los Angeles, California, the Municipal Code of Laws contains a chapter dealing with rental property, which applies to rental properties throughout the city. Rent control laws are contained in Chapter XV of the Municipal Code. The purpose of the rent stabilization section is to prevent landlords from charging of exorbitant rents, which the city believes would prove the natural result of a deregulated residential rental property market, due to an ongoing shortage of rental property.
Capital Improvement Rent Increase
- The Los Angeles Rent Adjustment Commission (RAC) is responsible for regulating rents throughout the city. If a landlord makes capital improvements to a rental property, the landlord may be able to increase the rent. Capital improvements must be intended to have an effective lifespan of at least five years, and include work such as the addition, replacement or repair of carpets and drapes, roofing, air conditioning, security gates, swimming pools and saunas, fencing and garbage disposal. Interior and exterior painting, and all building work may be included as capital improvement to a property. The RAC will only allow the complete exterior painting of a property as a capital improvement once every 10 years. Improvements to the common areas of properties containing multiple rental units, such as condominiums, also count as capital improvements. Capital improvements to a rental property will not qualify for a rent increase if the landlord charges the tenant a fee for the improvements. For example, if a landlord owning an apartment block builds a fitness center in the block and charges tenants for its use, it will not qualify the property for a rent increase.
Primary Renovation Rent Increases
- If a landlord carries out primary renovation work on a rental property, the landlord can apply to the RAC for permission to increase the rent to cover the cost of necessary renovation work. Primary renovations include major structural repairs to maintain the safety of the property, or major electrical or plumbing work requiring a permit according to the Los Angeles Municipal Code. Rent increases allowed under the Primary Renovation Program must be applied in two equal steps, over two years, and a landlord cannot apply the second stage of the increase sooner than 12 months after the date of the first increase. Usually, the Primary Renovation Program will only allow a landlord to apply for a rent increase every five years. The rules allow for more frequent increases, however, if the landlord can demonstrate that the property will suffer structural deterioration if work is not carried out in the intervening period.
- If an additional tenant comes to occupy an existing rental unit, increasing the number of tenants occupying the property, the landlord may increase the rent charged for the property. The additional tenant must increase the number of tenants occupying the property to more than were occupying it at the start of the current tenancy. For example, if three people are living on the property at the start of the tenancy, and one person leaves, the landlord cannot increase the rent, simply because another tenant joins the remaining two tenants. However, if a fourth tenant joins the original three, the landlord can increase the rent by an amount no greater than 10 percent for each extra tenant.