What Can Tenants Do When Rent Jumps?
Wednesday, January 16, 2019
Photo by Susan Murphy
Half of California’s renters spend more than 30 percent of their income on housing— housing experts call it “rent burdened.” A third of the state’s renters are considered “severely burdened” because they spend half of their paycheck on rent.
And rents in the state keep going up.
So, what rights do tenants have when the landlord asks for more?
KPBS’s Amita Sharma reached out to two experts for their perspective.
Dean Preston is the founder and executive director of Tenants Together, a statewide coalition of tenant groups focused on advancing the rights of renters. Dan Faller is the founder and president of the Apartment Owners Association of California.
As you might expect, the two had very different outlooks.
An interview with tenants rights advocate Dean Preston:
Q: How much is a typical rent increase in California?
A: Well, I wish there was a typical number. Unfortunately, it varies a lot by jurisdiction in different cities and that's for two reasons. One is the rental market is very different and the rents are very different city to city. And the second reason is that some cities have adopted rent control laws that limit the rent increases. So if you look at cities that do not have rent control laws and that are expensive cities [to live in], it's not uncommon at all to get rent increases that are in the double and triple digits.
Q: What are some of the most egregious rent increases you've heard about in California?
A: We've had calls on a hotline for tenants whose rents have literally doubled. No working family can withstand a rent increase of that magnitude. It ends up being an eviction notice. Sometimes, those are evictions or rent increases to drive tenants out and replace them with wealthier tenants. Other times, they are really ways to retaliate against tenants who asserted their rights. And so the landlord in those cases is not even looking for the higher rent. They're really using the rent increase to get people out of their homes.
Q: Are there laws that protect tenants in California if their rent rises beyond what they can pay?
A: Generally, no. California law is very weak on rent increases and allows exorbitant rent increases.
The cities that pass rent control laws have the ability to limit the rent increases that tenants face every year. And so in cities with rent control, it's much more common to see rent increases that are 1, 2, 3 percent as opposed to these huge double, triple digit rent increases. But generally speaking, if there's no rent control, a landlord in California is free to raise the rent as much as they want. And there are some very limited exceptions, but generally tenants are in a very, very vulnerable place when it comes to rent increases. And, it's one of the reasons that we advise tenants to join together with their neighbors to resist big rent increases but also to pass local rent control laws in their community.
Q: In cities that don't currently have rent control laws, do tenants have any recourse if their rent increases above what they can afford?
A: While the laws are very limited to protect tenants like that, the people always have some recourse to join with their neighbors to organize, to protest, and to try to push back and publicly shame landlords who engage in that kind of behavior. So people, who want to take action, can take action. But in terms of actually stopping the rent increase and pointing to a law that would stop that rent increase, in most cities in California, there is no such law.
There is a limited exception right now for rent gouging after natural disasters. So the fires, for example, in both Northern and Southern California have triggered some limits on rent increases over 10 percent. But that's really the exception rather than the rule. And most of the time, landlords are free to impose these huge rent increases without fear of violating the law when they do that.
Q: So if a property owner increases the rent, say 25 percent or 50 percent or even 100 percent, and it appears the rise is meant to get everyone out of the building, there really is no avenue for a tenant to pursue?
A: A tenant who has a lease, their rent can't be raised during that lease period. Once the lease expires, and this is the situation for most tenants in California, the tenancy becomes a month-to-month. And at that point, a landlord can impose the kind of rent increase you're referring to — a 25 percent, a 50 percent rent increase on a tenant. That is allowed under California law. Many people who call our hotline are really unaware of that. There is just an assumption that, of course, there must be a law that makes it illegal to raise someone's rent with a 30-day notice or a 60-day notice by 50 percent. But there isn't a law in California that limits rent increases like that. It's really been up to cities that are experiencing these huge rent increases to pass local rent control protections.
Q: What's the result of having next to no protections for tenants in California?
A: More and more of California renters’ money is going to their landlords.
They have less and less to spend on medical costs, education, groceries because they're paying more and more to their landlord. And the other impact is for those who can't pay it, they get displaced. We're seeing really large-scale displacement particularly from the more expensive urban areas, particularly along the coast and in the Bay Area. The Los Angeles area folks really have had to just get up and move and be dislocated from their homes, their communities and find places that are more affordable.
So that's the result. There are certainly tenants, and Tenants Together helps support folks who do this, who will push back against those kind of rent increases. They will organize and will join together with their neighbors who will publicly call out the landlords for that kind of activity. And in some cases they'll push back again and win those battles. But it's an uphill battle. The power under California law is very much given to landlords to impose rent increases at their whim.
Q: What usually happens to the tenants who are displaced because of rental increases?
A: They either end up homeless or relocating to other areas that are cheaper.
And so in cities that have homeless crises. All the studies of folks who were living on the streets show that most of them were housed fairly recently in the city where they're homeless, but they lost their housing because of either an eviction or a rent increase and, therefore, are living on the streets.
Increasingly in California, when tenants are displaced due to huge rent increases, they're unable to find other comparable housing in the same community. And so it has an incredibly broad impact on people's lives. It’s not just their home they’re losing but the schools their kids go to, the doctors they see, all the networks that all of us develop in our communities, they are severed from because of the greed of their landlords.
Q: What legal protections would you like to see the state legislature put in place for California's renters?
A: Well as a starting point, I think California legislators need to meet with and talk with tenant groups. There are dozens of tenant groups. I mean we have 50 member organizations of Tenants Together all across the state that are working on these issues every day in their communities.
And to date, very, very few legislators in California and Sacramento seem to really engage with tenant groups, really engage with the impacted communities, particularly in communities of color around the state. They, in Sacramento, tend to decide every so often that something is a hot issue, jump on it with a whole bunch of solutions that have not been run through local communities, and then end up with bills that die because the real estate industry opposes them. So for starters, what we'd like to see is the elimination of the state laws that tie the hands of cities.
That's why there was a campaign to repeal the Costa-Hawkins Rental Housing Act. There’s another terrible state law called the Ellis Act. Both of those laws really tie the hands of cities in what they can do with respect to rents locally. Those are special interest laws passed by the real estate industry. We need to dismantle those state laws that are getting in the way of the communities locally that want to solve their rental crisis with stronger rent control and eviction protections.
Q: How do you feel about anti-gouging rent caps?
A: Well I feel like, again, it's something that's being discussed among legislators. It has not been discussed with tenant groups, and we certainly would like to see limits on rents but (we) also need to really be engaging and make sure that the legislators are engaging with tenant rights groups in finding the solutions to the runaway rents in California.
An interview with Dan Faller of the Apartment Owners Association of California:
Q: Half of California’s renters are considered “rent-burdened,” meaning they spend more than 30 percent of their income on housing. A third of the state’s renters pay more than half of their income on rent. How sustainable is that?
A: It’s not. They’re going to have to get a raise at work. They’re going to have to get a higher salary or a higher income to be able to afford the cost of housing.
Q: Are there rent increases you've heard about in California that you consider egregious?
A: You can’t raise the rent to that level because the market will not let you. In other words, there’s a supply of housing and there’s demand by tenants. And the tenants are demanding more housing. So as a result of their demand, the price goes up to the fair market value. You can’t get more than that. An apartment owner cannot get more than the fair market value. The tenants, in effect, bid for the vacant apartments.
Q: Tenants rights advocates say there are few laws that protect tenants in California if their rent rises beyond what they can pay. Should there be?
A: I guess you could have a law like that. How about at the grocery store? Do the tenants need food? They need food more than housing, don’t they? What if you had protections for them at grocery stores? What would happen? The food would disappear off the shelf and the grocery stores would move out of the state. They would stop supplying food. They cannot afford to provide goods and services to people who do not have enough money to pay for it, to pay a fair market price. And that’s what would happen to housing.
Q: How would you characterize laws protecting tenants’ rights in California?
A: As unnecessary and totally unfair to people who have worked hard all their lives to provide housing to this group of people. The owners of the property are the biggest solution to the problem and to cheat these people out of the fair market price with these ridiculous "rights things." Renters’ rights should be limited to the right to an apartment if they’ve paid for it, if they’ve paid a fair market price. And if they don’t pay a fair price, it’s just like the grocery store, they’re not entitled to walk out with an extra bag of groceries.
Q: Do landlords need more legal protections?
A: Of course they do. I built some units. I didn’t build them here. I built them in another state where they have a law that says cities cannot pass rent control. I want a fair market price for my property that I had to work all my life to save enough money to be able to provide housing. To have somebody come along and say, "Well, I can’t afford it. I’m out of a job right now. I’m not working but I want you to pay for it for me." Why should these people who have sacrificed to provide housing be required to provide welfare to somebody who cannot afford it? Why shouldn’t all of society be required to do that if it’s fair? I don’t believe in socialism but if it’s fair and that’s what people want, then why shouldn’t all of society pay for it rather than just 1 or 2 percent of the population?
Q: How do California landlords view the housing crisis in the state?
A: Well, they know it’s real. It’s a real crisis. They view it just like everybody else. They hope that there will be a solution. They hope that the politicians will lighten up with their regulations and everything and make it possible to build more housing.
Q: Zillow has said for every 5 percent increase in rent in Los Angeles, 2,000 additional people become homeless. What is the solution for tenant displacement for rent increases that sometimes are in the double, triple digits?
A: The only way that a rent increase can be in a double or triple digit is if the rent to start with was way, way too low. What if the grocery store tripled the price of a head of lettuce? The head of lettuce was probably priced at a nickel a head before they increased the price. You can’t get double and triple increases if you start from a base that’s already fair market value. You can’t do it. It’s impossible.
Q: There is talk among California lawmakers about instituting anti-gouging rent caps because of the state’s housing crisis. Where do you stand on the idea?
A: I do not believe in gouging anybody. And I don’t believe the owners of property should be gouged. I would welcome a state law that says that housing providers cannot be gouged by the city councils by requiring them to charge rents that are less than the fair market value. But that’s not what they’re talking about. They’re talking about doing it the other way. And the reason they’re talking about protecting tenants is they want to use the property that owners have worked hard to provide to buy the votes of the tenants. Rent control has nothing to do with economics. It is totally a political tool. I believe in a free market. By regulating it, it contributes to the crisis we have. And tenant welfare, paid only by the owner of the building, is totally unfair. Fair market price is what all items should sell for. And whenever you have a fair market price, you’re going to get more of it. When you limit the price of that item, you’re going to get less of it. And everyone says we need more housing but yet they vote for regulations that hold down the price.
Q: What kind of role to you foresee landlords playing in the conversation about rent caps?
A: Very little. Politicians don’t need to listen to us. We only represent 1 or 2 percent of the population. We’re not going to get them re-elected. They have to play to the people who can re-elect them and that’s 50 percent of the population, or close to it. It’s a political issue. That’s what most people don’t realize. They argue the economics: Is it fair? Can we afford it? That’s not why the politician passes it. He passes it because he wants to get re-elected.
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