Renting in Los Angeles is about to get more difficult for many people.
The last of L.A.'s pandemic-era tenant protections expired February 1st. For the first time since April 2020, rent-stabilized apartment owners: 70% of rental units in the city – rents may increase. And the last part of the back rent must be paid.
Don't expect a soft landing. Depending on how the city responds, it could find itself escalating a lose-lose conflict with local landlords, and the pain would be widely felt: More than half of Angelenos live in rental units.
The city is already bracing for an increase in evictions and homelessness. An estimate 90,000 homes They have outstanding rent debt from the period when pandemic protections were in effect, and about 60% may not be able to pay it.
The city's fledgling tenant assistance program has distributed only A fraction of its budget of 30 million dollars; has 30,000 applicants applying for a total $473 million to cover back rent. A small minority of applicants have been approved but have not yet received money; They have been given a 120-day grace period to avoid eviction. But most applicants still have no idea if they will be approved.
The dominoes began to fall last year. Eviction Filings duplicate from 5,000 in February to 10,000 in April and May after tenants were again required to pay full monthly rent (separate from unpaid back rent) to avoid eviction. Since then, evictions have remained 20% to 25% above the old baseline.
After the uncertainty of recent years, many homeowners are likely looking for more income and stability. The pandemic was a cicatrization experience for smaller landlords, many of whom were squeezed as the city protected its non-paying tenants and as rents remained frozen amid historic inflation. Of course, owners are not entitled to perpetual positive returns. Housing, like any asset, has a risk of decline. Some landlords, especially those who aggressively acquired new rental units in anticipation of a sure payday, lost that bet during the pandemic.
At the same time, landlords have the right to evict non-paying tenants. They would also be justified in vetting prospective tenants more carefully within the confines of the Fair Housing Act. Instead of renting units quickly, they may leave them empty while they wait to find more financially established tenants. This could make it even more difficult to get affordable housing in Los Angeles, especially for those with unstable incomes (workers, contractors, artists), as well as those with potential red flags that background checks will inevitably uncover (such as individuals and renters involved in justice). with bad credit or past evictions).
The city has launched a tenants' rights awareness campaign, which could deter some overzealous landlords. The city also intends to aggressively expand the availability of legal advice for those facing eviction.
Legal representation is a fundamental part of the judicial process and it is crucial that tenants are protected from illegal evictions. However, paying a fleet of public defenders to challenge and delay each eviction attempt could add fuel to the fire and drain the resources of the city and landlords alike.
While universal right-to-lawyer programs have high success rates to keep people housed, it's unclear what percentage of these successes involve avoiding an illegal eviction versus a landlord giving up and picking up the cost of lost rent. Ninety-six percent of evictions in Los Angeles in 2023 was due to non-payment of rent, which should mostly be simple cases. There are also other, less expensive ways to prevent illegal eviction petitions from reaching court. In some cities, tenants with complaints about living conditions can protect themselves from landlord retaliation by legally withholding rent and depositing it with a third party. escrow account.
Providing advice is expected to cost the city $68 million each year, and remember that the city raised only $30 million for its rental assistance program. These resources could focus on relocating displaced families as quickly as possible. Instead, the city is pursuing a policy that further antagonizes landlords and sends the message to tenants that could They will be able to get away with not paying rent if they fight hard enough.
Los Angeles does not have to turn directly to the most costly and contentious policy to reduce evictions and prevent homelessness. In PhiladelphiaLawmakers made permanent an eviction diversion program at a cost of $15 million. Landlords seeking an eviction must participate in a 30-day mediation period with one goal: to resolve disagreements out of court and without an eviction. Under this program, more than 70% of disputes have been settled out of court. Hawaii did the same: 87% of cases ended in an agreement.
Los Angeles cannot afford a prolonged power struggle with owners. That risks creating a “survival of the fittest” landscape in which only landlords able to resist and adapt to tenant protections remain in business. Corporations already own more than 40% of the city's rental units, a figure that could rise if smaller landlords make good on their threats to exit the market, either by selling to corporate landlords or taking units off the market. This is potentially a big problem for this rental market, which is already among the worst in the nation when it comes to housing production.
On a more promising note, the economy has been roar with job creation and higher wages for those Lower end of income distribution. Many have returned to work after a tumultuous year of strikes. That bodes well for tenants facing their first rent increases in four years.
But the fact is that Los Angeles is one of the least affordable Places to live in the country. That's the root cause of the impending eviction crisis and why renters needed so much protection in the first place. If the city prefers to continue strengthening tenant protections and at the same time prevent developers from building affordable housingPrepare for a new status quo: a tighter and even more expensive rental market under the increasing surveillance of irritated landlords and faceless corporations.
George Zuo is an associate economist at Rand and professor of policy analysis at Pardee Rand Graduate School.
