Rent control in LA County

One of my brothers has an MBA from Columbia University. At Christmas, we debated rent control. His arguments went something like this: Rent control interferes with the supply and demand for apartments. Because it warps economic incentives, it leads to inefficient resource distribution. Apartment vacancy decontrol, a feature of most rent control, discourages landlords from maintaining units until the end of a tenancy. Vacancy decontrol is an excuse for landlords to seize on the slimmest excuse for the eviction of a long term tenant. Rent control places an unfair burden on landlords who can’t always recoup their costs. Rent control dampens new apartment construction, while acting as an incentive for condominium conversion, leading to tenants losing the very apartments they were supposed to be able to keep. Because newcomers pay more than old timers, rent control causes resentment which disrupts community cohesion. People are less likely to take a job that requires moving if they have a good deal on their current apartments. Essentially rent control is government mandated theft of what a landlord should rightfully earn from an unregulated market.
 
 My arguments were more personal. I have spent all my life in cities, Boston, New York and Los Angeles, with frequent stays in San Francisco. If it hadn’t been for rent control I wouldn’t have been able to live there. Long term tenants on a fixed income can only afford apartments due to rent control. One of my tenant friends, now 63, is paying for thorough apartment renovations herself because she envisions staying in her home of 33 years through retirement. Rent control can lead to some unfortunate consequences. I know one couple that’s been together for 16 but they have never lived together. Why? Both have rent controlled apartments.
 
 By 1985, more than 200 US municipalities covering 20% of the population adopted rent control. Some cities like New York have rent control woven into the fabric of their lives. New York City’s rent control began as WW II price controls that were never lifted. People there are loath to give up their homes for any reason. When I moved to New York City right after college, I found it so hard to find an affordable place to live that I became a real estate agent for a first look at the city’s housing stock.
 
Several California cities adopted rent control when promised rent decreases didn’t materialize after the passage of Proposition 13 in 1978 which limited property taxes.  In Los Angeles County, rent control exists in Santa Monica, Beverly Hills, Los Angelesm and West Hollywood. A ballot measure to beat it back in the state was defeated.
 
Although rent control seems to exist in cities where tenants outnumber landlords, it never caught on in Chicago. Rent control in Boston, Cambridge and Brookline was terminated through a massive landlord funded ad campaign that backed a statewide referendum. Residents in those three cities voted for rent control. The rest Massachusetts did not. Rent control was outlawed in the Bay State by a majority of 1%.
 
So what does rent control mean to you as a tenant?  Your rent only goes up by a fixed percentage each year. Here in Los Angeles, the most recent allowed increase is 3% even though the inflation rate for the last 12 months is 1%. Your rent can only be raised once a year. My landlord does it at Christmas. He doesn’t celebrate that holiday himself. I suspect he chooses that hectic time of year because it’s when tenants are the least likely to move in response to an increase.
 
When choosing a new apartment it’s important to know whether or not you are covered. A friend of mine moved from Los Angeles to nearby Marina del Rey. He signed a two year lease and moved his boat into a slip outside his door. At lease renewal he was hit with a 20% increase. He bit the bullet and stayed.
 
As to my brother, a former landlord and investment banker, this apostle of the free market lives with his family in a 2 bedroom, Manhattan apartment under rent control.