L.A. County wants to cap rent hikes at 3%. Landlords say that would push them to sell
L.A. County wants to cap rent hikes at 3%. Landlords say that would push them to sell
A proposal to cap rent increases at 3% for many landlords in unincorporated L.A. County is meant to keep housing affordable for at-risk tenants.
Paywall removed: https://archive.is/MbQYG
Oh my God oh my God if the landlords have to sell, that would be... Check notes... That would be really good for people who want to buy houses.
this is what is known as "a feature, not a bug"
But worse for those looking for a rental.
Rent control is a bandaid on a real problem that makes things worse long term. What California needs is build more, which means end the NIMBY and unfreeze property taxes so those seating on underutilized land are forced to develop it or sell.
LVT, not property tax. You want to tax the value of the land, not the value of the property built on it.
Would property taxes actually do much? They're so little even in high property-tax states that I think you'd need to do a lot more than that to FORCE rich people to utilize their other properties. High taxes would potentially push more costs on renters. Maybe we should just outlaw having more than 1 or 2 homes... including for real estate companies and banks :)
I don't think you need to add any taxes. If the area is attractive enough to warrant a higher density redevelopment, just unlock it and it will get done.
I mean, if you are a developer and you know for certain there's a lot of interest in a certain area and you know for certain that you could buy that big single family lot and make a 3-5 story building instead with 10-20 apartments, you'd be crazy not to offer double the market rate to get it and develop it as fast as possible.
Just need to change the law to allow redevelopment of single family areas into medium density.
Hmm build more. I’d be curious to see the stats on this. California has probably built 10 times more than the rest of the country combined over the last decade or so. People need to GO THE FUCK BACK HOME.
Good. Bye bitch.
They'd flood the market with properties shifting us along the supply curve to allow younger people to afford properties?
Darn, that'd be so... awful? No, I was looking for awesome.
It probably won’t flood the market as property/land is sort of like gold. Renting it is just extra money on top of land value rise. It only gets rarer. (In desirable locations)
The problem is basic. Everyone wants to live at A but A has finite amount of space. This is the core theme of property gold. Renting is just double dipping
The solution is complex. It isn’t to expand A but to make B equally attractive. If the small area in city was not the ultimate goal of whole country the price boom would rapidly crash overnight.
What is priced isn’t property but dreams and aspirations, prestige, bright future in the city of opportunity. Even love in a way because good luck finding someone in some rural mud hut.
Hence the inaction of government to invest in the rural areas adds to the housing bubble. And of course capitalism itself prays on individuality at the cost of community. Me get rich in the city vs Build community and improve what is around me for me and others. The second is not advisable to anyone to even attempt.
Everything is fuelled into those few acres of asphalt and concrete. The impossibly hot focus point of the nation.
So incredibly fierce that you can die out of heat even during winter. The speed limits on the arteries are rather minimums than maximum as the circulation of wealth cannot tolerate stopping for even the 20 seconds of red light. Every crossing is a race starting line but there is no end. Furious engines roar jolting towards the success.
The night is day and the day is madness.
Don’t threaten me with a good time.
Is there a downside further in the article or is it just all positive news?
The downside is they’ll just be bought up by corporations who will be even shittier landlords.
If the market is adequately regulated they wont be shittier landlords. There somehow is this romantic idea of smaller scale landlords to be like the good old guy that want to help a family find a good place and accept a modest profit. They exist, but the majority are just equally cutthroat like large corpos. Difference is that large corps have more means to be strategic about it and accept risks like 5% of tenants suing successfully while the rest just accepts the illegal treatment.
Idk about that. Almost all renting horror stories are with small private landlords.
good, get a real job
My mom is in her sixties, not everyone wants to work until the day they die
Introduce additional legislation that limit property sales to corporations and I’ll donate to yer campaign
3% was the top annual pay increase at the Fortune 500 company I used to work at. 3% max increase for those that "exceeded all expectations". Probably less than 1/3 of employees.
So if it's good enough for a Fortune 500 company, it's good enough for every landlord. 3% max, and only to max 1/3 of their locations/rooms.
My old company's "top" level required the VP to sign off on. So maybe 1-2 people in a department of 150 got it.
One of the issues is if material costs to maintain the property increase steeper than this cap.
Though the solution is pretty practical -- cap it at inflation.
Good. Fuck landlords. There should be a law they can only own multi family units.
Good riddance
SELL UP MOTHERFUCKERS
You know that they will just sell to large corporations that will fuck you over even harder. This is not to be celebrated
Yeah, big corporate landlords are a problem. Stopping all landlords from jacking up prices is a good thing. This can build momentum for more effective legislation for corporate landlords.
"But if I sold it, I'd lose money!!!"
They will. And you'll end up homeless.
This would driving down the cost of housing because of an increase in inventory. Sell them to whom? Other landlords? Or would it be workers?
I think I just found my latest political campaign
Private landlords would just sell to large corporate landlords who could profit with smaller margins.
large corporate landlords who could profit with smaller margins.
Could, but typically refuse to.
And these corp landlords can choose to not rent any longer, let the property remain empty for the legal length of time and then start renting again at the new and more profitable higher rate.
I don’t know the laws in California, but isn’t there just a surplus of houses empty for this very reason? If you look at the numbers, they could be sitting on these houses and get low interest loans on the value, which earns higher invested interest elsewhere. Anyone squatting can get away with it because the company will just do the legal route and get more money from these people (even if it’s debt that just hangs over their heads for a while). The rich just keep getting richer…
I'm guessing landlords would just property swap.
Buy, evict, rent at a higher price
Yes, other landlords that can get new tenants for more money. If the houses just change hands every year, there is no cap since everyone plays musical chairs
That's-the-point.gif
The push to change the county’s rent stabilization rules yet again was met with skepticism by Supervisors Janice Hahn and Kathryn Barger, who voted against the proposal. They said they were worried that the government was overburdening smaller property owners who rely on the rent to pay their bills.
LOOOOL
If landlords have trouble to pay their bills, may I suggest them to consider some austerity? Perhaps spend less on coffee? They give up their avocado toast? Or maybe pass up on their weekend escapades in humble leisure trips to Singapore?
Landlords just need to pull themselves up by the bootstraps.
“We’ve once again put these struggles on the back of landlords,” Barger said.
Oh no... anyway...
Cheaper homes in L.A.? We can't have that!
Landlords say this would push them to sell.
Yay? Maybe then it could be sold to people who are desperate to get off of the rental merry-go-round.
As in, these homes will be owned by people who actually live in them; non-parasites who aren’t going to be sucking the lifeblood out of hard-working, working-class Americans.
And maybe instead of being landlords, these parasites could actually go out and get a job?
Sounds like we don't only need to cap increases at 3%. We also need to give loan assistance programs so the people currently living there can capitalize on the sudden availability. Otherwise, you get into the situation of "I'm spending $2000 on rent now, the mortgage + escrow payment on the same property would be $1500, but the bank says I don't qualify".
If you can't buy it while renting today, you won't be able to buy it tomorrow when your landlord sells it. The house will be bought by a corporate investor and you'll get fucked. Just like it's happening in the UK right now. Prepare for mass homelessness.
Landlords will complain every time any government, local, regional or national, attempts to regulate their bullshit, and plenty of people will rush in to take their side because they see themselves as temporarily embarrassed ghouls. Tax them to hell and back.
they see themselves as temporarily embarrassed ghouls
Even beyond that, there's little understanding of landlordism as a patronage system. "Oh, that person just saved up a bunch of money to buy a second property and then spends a lot of time and energy maintaining it, so they deserve a profit!" is just people regurgitating real estate propaganda.
You're not describing the lion's share of properties owned by hedge funds, wherein cheap access to low interest debt gives a handful of mega-banks and billionaires the ability to gobble up 40%+ of outstanding real estate. You're not describing the process of slumming a neighborhood through deliberate public-sector disinvestment, before forcing people out through petty fines and over-policing until you can snatch up the real estate on the cheap at public auction or estate sale. You're not discussing how red-lining and eminent domain can be used to shrink housing supplies by limiting who has access to which schools or public utilities. Or how tax incentives can be used to drain off public funds for profit-chasing private sector enterprises.
Even before you get into the delusional would-be landlord, you've got this enormous network of socio-economic back slapping and dick jerking that is fundamental to the creation of a landlord class that we simply don't talk about.
Sounds like that’s by design. If they all wanna sell prices come down on that front as well. Sounds like it should be capped at 2 percent to me.
0%. Rent when established is the rent for the unit in perpetuity.
Decide to rent? You get to rent it out until it's no longer worth it, then it becomes owner occupied forever or torn down for high density housing. Sounds great to me!
"This would never work!1111oneoneone" - my last apartment was $1425 when I moved in and $1500 after I moved out 10 years later. If they rent it out again as-is it would be all of $1800 at most.... but they could still make money at $1425/mo, or even less, after water/insurance/property taxes and income tax.
Maybe everything should be capped at 3% since that's the standard BS bonus we all get each year.
Oh man, I wish...
You get a bonus?
Aww.... Yeah, if you don't, move to a different job 😉. Easier said than done, I know. My dad and mom never got bonuses of significant value but when they did get extra money as bonus they were so happy. I get a bonus but I'm not really money driven. It makes my wife happy.
https://www.bls.gov/news.release/prod2.nr0.htm
4.2% increase in hourly compensation since 12 months ago
Why would that push them to sell?
Edit: so the interest rates have risen several percent along with the cost or labor and materials eating into the profits of serial buyers who leverage loans to buy more on previously purchased properties. If they don’t jack up the rent, they can’t manage the debt.
That said, fuck those guys, hope they go bankrupt. This isn’t someone who has an extra property they invested in years ago, these are the clowns buying everything up and squeezing the market.
Because they're over leveraged. They've purchased assets when rates were low and now that rates have gone up they haven't factored this into their profit margins and would either go under or not make enough.
It's disgusting. If you have enough money to play the game you should have enough money to live with the consequences and a tenant isn't your get out of jail free card for your shitty planning.
Ok. So they’re playing the old game of leveraging assets (properties) to buy more and painting themselves in a corner because of rates. Well, fuck these serial buyers squeezing the market. Hope they do get forced to sell.
What is this? Making risky business decisions and getting both private profit and taking private risk? Get out of here you damn socialist! America is when the profits are privatized and the losses are socialised!
Costs rising more than 3% a year. Since it's California I'd imagine the insurance is going up much faster than 3% of total ownership costs. If small landlords cannot stay in the black because they can't afford the insurance with capped rent increases they will sell to the entities that can afford to self-insure. Corporations like BlackRock
After reading a comment by another poster I don’t think these are “small” landlords, at least not mega-corporate buyers, but the kind that serial buy properties leveraging the assets to buy more. So not someone that bought an investment or two but someone buying as many as they can get away with. Maybe the bigger fish are doing it too… but anyway, they don’t have the profit margin on the rates they took the loans that are now rising. They probably didn’t do fixed rates, as you wouldn’t as a non-homeowner. So rates went from 3% to what…8%? Margin is eaten up along with inflation, labor costs, materials, etc.
Screw ‘em. They just want to make the renter eat it so they can profit, I have zero sympathy and I hope they go bankrupt.
The running costs are not only insurance costs. The insurance "crisis" e.g. entirely predictable results of climate change affects everyone and why would the tenants have to foot the increased risk of damage to their landlords property?
Finally i doubt that it will just be swept up by actors like Blackrock. If the profit is limited due to the law, then the value of the property will reduce until equilibrium at which point each solvent market actor has equal opportunities. Because of the 10 Million property values now at 6 Million, the insurance rate will react accordingly.
Because they're whiny little babies
Won't someone think of the landlords?!?
I do, but I can't decide if I should bbq or braise them :-(
Gross. You really shouldn't eat garbage..
Oh nooooo ...
Hi, that's what I wanted to say!
Landlords say that would push them to see
Good. Do it. DO IT.
Oh no?
The poor little landlords! They have to find something else to do with their lives besides sitting on their rear ends most of the month and laughing all the way to the bank once a month.
The problem is raising rents are always due to lack of supply. I used to be very supportive of rent control but realized it's just a shitty band-aid on the real problem - lack of housing.
It will keep rents low for a bit, but won't fix the fundamental problem that allows high rents in the first place: and people will still struggle to find housing.
And you can bet your ass that any new will have massively increased rent or prices to compensate.
The real fix, like everywhere else, is to kick out the nimbys and allow building again
Well, the British government has introduced a lot of changes recently, that made the landlord lives harder and landlords did start to sell. Now we have a situation, where people fight over places to rent, most places don't even get advertised, people take them without viewings and rent prices have skyrocketed. All while housing stock in general got noticeably reduced. And, of course, homelessness is through the roof.
landlords did start to sell
while housing stock in general got noticeably reduced
I'm not sure how those two things can coexist. So landlords started selling but then nobody that owned just one property sold so despite the influx of properties being listed for sale, the stock reduced? So there's fewer rental units which has people trying to get into them but there aren't more people purchasing the properties?
While I sympathize with high rent prices, it's still no different than say someone who owns a Wedding venue and rents out the location, tables, chairs, etc. They paid for the initial investment and are making money off of it through rental. That's how investments work. Otherwise, what benefit is there to owning it outside of selling it outright.
You are mistaken. I mean, I got married, and I rented a space for it. I payed it once. It's 20 years behind me. It was a one time deal. The two have nothing to do with each other. You're obviously kinda dumb. Or lazy. Or both. I mean, come one, that's your comment? It's so stupid. *edit really with the hate on this comment? Maybe I need to expand to make it clear that this person is an idiot. Rent a home to people: You lock them into a contract that is usually 12 months or more, they have to pay you all that time, plus, if they decide they don't want to move at the end of the contract, they just stay there and the landlord doesn't have to do jack shit. No painting or sprucing up. Rent out a wedding venue: one time deal agreed upon. Owner actually has to keep up the space where people get married, actually has to work for the money because the people get married there, have the event, and leave because that's a whole different fucking thing. Bottom line of my comment: landlords just live off other people paying them money with little effort, whereas owners of a special occasion space actually have to work hard at attracting new customers, not renters who are going to live in the space. Are we really this stupid now that I had to explain that? I mean, really. People seem to be taking a stupid pill today.
k
I get the concern that small landlords will sell to big corpos who can handle the thinner margin, but for those smaller landlords that have paid off their property, or bought 10+ years ago, the margins are already super high, so the 3% cap isn’t going to cause them to sell when they have a $1200 mortgage and are collecting $2800 in rent, or no mortgage at all in many cases so pure profit more or less
I think I feel the world’s tiniest tear forming!..no, I just had to fart.
Smaller.
So it's a win-win then?
So, win-win. Got it.
"Landlords say that would push them to sell."
So, you're saying it would increase available housing supply? Sounds great.
Oh, and for the record, they will not, in fact, sell. Most housing in Ontario is still under a 2% annual rent increase limit. Landlords are doing just fine (and by "Just fine" I of course mean "We have a national housing crisis because landlords are hoarding all the available supply")
This idiots are too high on their own farts to realize this propaganda ain't working lol
"what do you mean a vampire shouldn't suck so much blood? might as well put a stake through my unbeating heart!"
sounds like a win-win
Oh no.... they'd have to sell >.>
Sell to whom, though?
The people enjoying the suddenly over-supplied market that used to pay way over mortgage to rent from these fucks.
Foreign investors (in part)
I want to see a crack down on that too
After the whole graffiti towers thing, the city is also a bit annoyed by them, too.
Depends if they're on the coast or not.
Fucking Aquaman?
Why would they care?
"Push them to sell" ... "to larger corporations that have bigger financial reserves and plans to keep swaths of housing off the market in a monopolistic practice to keep supply low and rent always growing at 3%"
Ok, so let's also prevent that from happening. Unless you don't think good things are possible, in which case let's all just go outside and lay down to wait for the inevitable
Please do this, we need more houses on the market
Oh yes I think selling a great idea!
Good. Then do it!
Oh know! Won’t someone think of the landlords! They might sell their excess homes to people who might want to actually own the place they live! It’s clear those people wouldn’t be responsible enough to handle that or they would already be homeowners! Landlording properties to renters is protecting them!
It's Oh no btw
Just as long as they also cap property tax and insurance increases at 3%, I'd be fine with that. I had both more than double in price in 3 years.
Nah. Property tax is good. It pays for better community spaces and services. Better roads, local infrastructure, public transit, schools. It probably didn't go up very much if at all as a percentage of your property value. They likely just reassessed your property value and they've doubled since before COVID. It's completely normal for taxes to go up with property value.
Insurance etc.... yeah, a call would be nice
Property tax is alreadly locked in California.
Prop 13 is one of the main reasons i moved out of CA
If someone buys a home that was rented. Would the cap apply to them? Because this might result in a loophole
If they're then renting it out to others, sure. I don't see the problem, though.
That's a good question. But keep in mind that there are significant taxes associated with selling a home in most places that would dissuade landlords from trying to game the system that way. Then again, they're just one more loophole from making that plan work.
I'm giving it to my brother. Or just sell it for $100 to yourself
Good.
I think there is quite an easy solution to the housing issue we're facing: exponential tax increase per property.
There is no reason for someone to own more than one property in a city. No reason at all. But even if you could find one - let's say the first 2-3 properties (defined as houses/apartments of less than X area each) have regular taxes. But then? Then it gets retarded. 500k more per year for the fourth one. 4 mil extra a year for the fifth. 50 mil extra for the sixth. One billion for the seventh. You're a property developer? You have until 2 years after the property was finisbed to make sure someone has bought every little bit of it, otherwise that 40 apartment building will end up costing you twice the foreign debt.
Can't pay the taxes? You can always sell the place, at a fair market value. Let's say your two uncles died in a short timespan and they both left you their houses, but you had some property already and now you're up to 5 residential properties but you're not prepared to pay the extra few million. You can always list their houses. Every month they are listed and don't get bought, you reduce the price by 5%. Overvaluing the property gets it confiscated - you surrender your property to the state, which then distributes it to those in need in a lottery. You can also opt to just give away some of your less desirable properties directly instead of trying to sell them.
But no, that'd be sudden death for all the retards who keep building, all the fuck heads who keep buying and holding, and all the politicians whose pockets get padded for listening to whichever lobby.
↑ supply or ↓ demand. As much as it frustrates politicians, these are the only true levers.
Of course, economists have successfully predicted 5 out of the last 3 recessions so who knows. Why don't you go ask Chat GPT.
So we should keep going after land with its perfectly inelastic supply, then.
Pushpush
This is a buff
Reminds me of: https://youtu.be/fS9PvVCyazY
This is first order thinking. What this would cause is much much less building of units that people would rent, so the total supply would slow way down and housing would get worse.
Wouldn't lower land prices mean higher ROIC and lower risk for developers (individual or corporate) ? And this hence lead to more housing?
Unfortunately, I think you're right. What is the solution to outrageous rent that doesn't involve the government providing more rent subsidies that simply funnel public money into the hands of property owners? That solution encourages property owners to raise rent because the government will increase subsidies to cover the difference.
The problem is the government makes it too hard and expensive to build anything. People dont realize this but on average the government adds over $100k per single family house that is built. As a person that is in housing, my number one issue is with the government, and they only make it worse. So the solution is to greatly reduce the amount the government is involved in the creation of new housing.
A 3% cap is absurdly low. While people are saying "don't threaten me with a good time," this also means there are going to be fewer new units. Although considering how few units many CA cities have been adding (some have even removed units), it might not have too much of an effect on that regard. I would could see maintenance on existing units dropping and many more unofficial units popping up.
Fewer units, but more home ownership.
We don't want to be a nation of renters. It's not good for society; it's only good for a minority of individuals.
And fewer new units? Where are you pulling that from? It just means developers will be building for home owners, not renters. Like they did back in the Good Old Days, when young people could actually realistically consider buying a home someday. You know, re-creating the conditions that the younger generations are always bitching about that boomers had which aren't available anymore. Back when not all the land was owned by a few giant corporations.
Fuck renters. Fuck them right in the ear. They can all go eat a dick.
Disclaimer: I've owned every house I've lived in since 1998, and even with that collateral, every purchase has gotten harder to find and more expensive. So much of America is owned by property developers, it's disgusting.
Fuck. Renters.
3% is about average inflation, why is "making constant money including adjusting for inflation" low?
Well if you recall, there was a year where general inflation was far above 3%. Inflation is also not uniform and can be higher in some cities than others. And this is not inflation + 3%, it is 3%. Many people also have to borrow to build which means they are not simply paying the rate of inflation but what the banks are charging to borrow. Currently that is around 7%. So anyone looking to build units is looking at a negative return if they borrow to do it which means they simply will not.
Make no mistake, I do agree with caps but something that is not static makes more sense. Having it a static rate will lead to large unintended consequences.
I'm old enough to remember when the government has tried to cap the cost of one thing while ignoring other factors. It never ends the way the government thinks it will.
That's bullshit. Nyc has rent stabilized apartments and it's fucking fantastic. Not perfect of course, but really really good. Those apartments are highly sought after. The biggest problem is that there aren't remotely enough of them
I'm only enough to remember when corporations were not people, and when the ultra wealthy paid taxes.
Corporate personhood was ruled on in 1886.
If you're talking about a government that is ignoring other factors, which is not true in this situation. Go read the article.
But even in general, if you're trying to argue that the government can't possibly solve the problem of mega corporations buying up tons of property, making tons of money, and screwing over millions of Americans, then you might be right but I sure hope you're wrong.
No agency/group/organization can possibly account for all factors. They are going to fail to take something into account.
That something is going to blow up in their face.
I remember when the government tried to tell truckers they couldn’t charge more to ship products. The government failed to take into account a little item called gas, to this day I can’t figure out how they screwed that one up. Guess what the truckers did.
They put the keys on the dash and said f u. Ask truckers who drove during the 70s and 80s and they will tell you about it.
This too will blow up in people’s faces.
Is rent getting out of control? Yes. But if someone says “ oh we’ll just put a cap on how much can be increased and that will fix the problem”. It tells me they are just delusional. How do we fix the problem? I don’t know. But yeah this will end badly.
Rent control is literally the textbook case of making a bad situation worse via unintended consequences.
If it's textbook, can you describe the textbook examples?
I learned this in my Econ101 class; if you impose rent control you will disinsintivize investment into building homes exacerbating the problem of housing supply. Some one in my class literally asked why rent control was common in places like NY and my Econ teacher dodged the question. Econ101 in the US is basically neoliberal indoctrination.
The easiest response to the textbook is to point out that the current problem isn’t supply. In the US we have 6 houses for every homeless person. We have plenty of housing stock. The problem monopoly power over housing.
Beyond that I believe that housing investment should be managed cooperatively; rather than by the profit incentive.
Sure, so Oregon did the same thing in 2019.
"7% plus the Consumer Price Index for All Urban Consumers, West Region (All Items), as most recently published by the Bureau of Labor Statistics, or 10%, whichever is lower."
https://www.oregon.gov/das/oea/pages/rent-stabilization.aspx
So 10% in 2024, 14.6% in 2023, 9.9% in 2022.
What this does is encourage landlords to increase rent by the maximum allowed, because they don't know how much they can increase it next year.
Even in years where they might not have had a reason to increase rent, or increase it minimally, they take the maximum.
https://www.opb.org/article/2022/09/13/oregon-maximum-rent-increase-announced/
Not OP but ill do you one better and link the free online textbook that is used at a number of universities.
Look up "The core Economy 1.0" chapter 11, section 10. Case study on fixing rent prices and the following consequences, along with a step by step diagram.
You forgot the other thing they teach.
Never discuss that with anyone who hasn't studied economics - the same as how we will deliberately reduce GDP to increase the unemployment rate, or sometimes a country is better off by axing a productive market and putting 50k people out of work. They don't see how and will only take it out on you.
Its just not worth the arguement.
Maybe the point is such a system that only works on numbers is inhumane and should be avoided? Economics people want to argue within economic frameworks which don't work well if some assumed market conditions don't exist. I have never seen reality work quite as described when free market breaks down and MNCs control government policymaking