What is in Store for Future Rent Increases in the City of Los Angeles
The Los Angeles City Council made a decision on February 7, 2023, to pass a revised ordinance known as the Just Cause for Eviction Ordinance (JCEO). This amendment introduces a new provision requiring landlords to provide relocation assistance to tenants who experience “economic displacement.” Under this provision, landlords must offer relocation assistance to tenants who opt to leave their rental unit following a rent increase exceeding CPI + 5% or 10%, whichever is lower. The implementation of this relocation assistance requirement is set for March 27, 2023.
This article focuses solely on the relocation assistance requirements pertaining to tenants who choose to vacate their unit due to significant rent increases.
Who does this apply to?
The City’s Just Cause for Eviction Ordinance encompasses the requirement of providing relocation assistance in cases of “economic displacement,” and it applies to all units governed by that ordinance. The JCEO is applicable to nearly all units within the city, except for those falling under the Rent Stabilization Ordinance (RSO). In general, single-family homes and multi-unit buildings constructed after 1978 are subject to this ordinance, while most other units in the city adhere to the RSO’s just cause eviction requirements.
The economic displacement relocation assistance requirement primarily pertains to non-RSO units that are exempt from both the Rent Stabilization Ordinance (RSO) and AB 1482’s rent caps. This requirement is particularly relevant to properties meeting specific criteria, namely those issued a certificate of occupancy within the previous 15 years and single-family homes not owned by a real estate investment trust, corporation, or LLC with at least one corporate member. These properties are more likely to experience rent increases for existing tenants that surpass the lower limit of CPI + 5% or 10%.
As per the ordinance, landlords are obligated to provide relocation assistance to tenants who choose to end their tenancy due to a proposed rental increase that surpasses the lower limit of CPI + 5% or 10%. The calculation of the percentage increase considers the cumulative rent raise over a 12-month period. Consequently, the relocation assistance requirement comes into effect if the tenant experiences a single increase or multiple increases within a 12-month period that collectively exceed the specified threshold. Temporary, promotional, or temporary rent discounts are not factored into the calculation of the percentage increase.
The calculation of the one month’s rent amount is based on the rental payment made by the tenant at the time of receiving the rent increase notice. This calculation excludes any temporary, promotional, or discounted rent amounts.
What happens if I violate rent increase restrictions?
Since the relocation assistance requirement for economic displacement is a component of the JCEO, the penalties and remedies outlined in that ordinance are applicable in cases of non-compliance with the relocation assistance requirement. Consequently, failing to comply with this requirement can result in misdemeanor charges and can be used by a tenant as an affirmative defense in an unlawful detainer or any other legal action initiated by a landlord to regain possession of the unit.
Filed under: City of Los Angeles