Rent stabilization helps combat against inflated rents, protecting renters against skyrocketing costs. In California, while the landlords and tenants can set the initial rent at any amount; the rent stabilization ordinance protects against surge prices. This is clubbed with “just cause” tenancy protection, where landlords cannot evict tenants unlawfully.
West Hollywood is one of the 20 cities in the State where the rent control ordinance has been enforced. If you own an investment property in this part of the state, here’s everything you need to know about the West Hollywood Rent Stabilization ordinance. With this guide, we will be covering answers to questions such as how much rent you can charge, how often you can increase rent, what the security deposit can be, among others.
What is the Rent Stabilization Ordinance?
Enacted on June 27, 1985, the ordinance has been brought into effect to ensure affordable rental housing in West Hollywood. What it sets out to do is to regulate residential rent levels, and also to ensure that basic housing services and specific maintenance standards are met.
What is Exempted Under the Rent Control Ordinance?
The exempt units include:
- New construction with a certificate of occupancy issued after July 1, 1979;
- Condominiums and single-family units that are owner-occupied for two or more years and rented after January 1, 1996
- Institutional facilities
- Non-profit housing
- Government-owned or government-assisted (Section 8) housing
- Some units in hotels or motels.
What is the Maximum Allowable Rent?
There are three broad classifications here:
- Tenants who moved in on or after January 1, 1999
- Tenants who moved in between January 1, 1996, and December 31, 1998
- Tenants who moved in before 1996
If the tenant moved into the property prior to January 1, 1996, the Maximum Allowable Rent (MAR) is the rent that was charged on April 30, 1984, with annual general adjustments and any other adjustments approved by the city.
If the tenant moved in on or after January 1, 1996, MAR is fixed at the initial rent charged for that tenancy. However, if the tenant has moved into a condominium or single-family unit on or after January 1, 1996, the landlord can apply for exemptions from the provisions of the Rent Stabilization ordinance.
How Often Can You Increase the Rent?
For property investors who are in compliance with all the norms, the rent increase can happen on the first of September of each year, with due notice. It is important to remember that the general adjustment in rent has to be done taking into account 75% of the consumer price index of that area. It is also important to note that the increase cannot be banked for previous years and passed on to the tenant.
You can also apply for an additional rent increase if you feel that you have incurred expenses that prevent you from receiving a just and reasonable rent. In such cases, you are required to file an application and appear before a Rent Stabilization hearing examiner to examine your case.
On the other hand, the tenant can apply for a rent decrease if:
- There is a reduction in housing services
- Adequate maintenance is not performed
- A base rent hasn’t been established
A rent decrease hearing can take place before a Hearing Examiner who will ratify the evidence presented and determine if a rent decrease is in order.
Alternatively, effective mediation can resolve the dispute between the landlord and the tenant. Not only is this quick and easy, but it can also be used at any point in time.
What Happens If the Unit is Vacant?
If a rent-stabilized unit becomes vacant, the landlord sets the rent at whatever amount prospective tenants are willing to pay. In turn, this rent becomes the basis for the maximum allowable rent for the tenancy.
When a new tenant moves in, the landlord is required to re-register a rental property. Re-registration will establish the rental amount for the unit, and consequently all future rent increases.
What about the Security Deposit of Rent-Controlled Apartment?
California State allows the collection of a security deposit, which is different for furnished and unfurnished units.
- For furnished units: Equivalent to 3 months rent
- For unfurnished units: Equivalent to 2 months rent
West Hollywood rent stabilization ordinance demands that the amount of security deposit cannot be increased during the period of the tenancy. Property investors are also required to pay simple annual interest on money held as a security deposit.
What is the Other Fee Payable Under West Hollywood Rent Control Ordinance?
Some of the other fees payable include:
- Registration fee
- Late payment of rent
- Fee towards bounced checks, if any
- Fee for replacing keys
What are the Grounds of Eviction Under the West Hollywood Rent Stabilization Ordinance?
Eviction is possible on the following grounds:
- In cases of non-payment of rent
- If the rental unit is used for illegal purposes
- If the unit is subleased without landlord permission
- If the rental agreement is violated or not renewed
If, however, it is a no-fault eviction, the tenant is entitled to relocation assistance. The relocation fee amounts depend on the status of the tenant(s) residing in the household. Also, it is adjusted by the rise in the Consumer Price Index on July 1st of every year.
The above encapsulates some of the basic provisions of the West Hollywood Rent Stabilization ordinance. This, of course, is not intended as a substitute for reading the ordinance and its regulations, but as a handy guide. For more details, you could refer to the City of West Hollywood Rent Stabilization and Housing division.