Bureau of Labor Statistics in June released the latest year-over-year change in consumer prices (CPI) and to nobody’s surprise the cost of living is on the rise! From May of last year to May of 2021 the cost of the ‘all items’ basket of goods and services as measured by CPI in our region is up 3.9%. Once the pandemic ends the rent will rise too — and very likely by 3.9% for rent-stabilized households in Beverly Hills. That would be the highest allowed annual rent increase in three years and it will come right on the heels of the pandemic.
How the Allowable Annual Rent Increase is Calculated
Landlords in Beverly Hills may raise the rent once in any twelve month period by a percentage established by the city. The percentage reflects the change in consumer prices for a variety of goods and services — including housing — in the Los Angeles-Long Beach-Anaheim area. The percentage is calculated by comparing CPI for the current year with the CPI for the preceding year. CPI is calculated by the Bureau of Labor Statistics on a monthly basis.
There are two categories of rent-stabilized tenancies in Beverly Hills. The vast majority of such households fall under Chapter 6 of the rent stabilization ordinance. The maximum allowed annual rent increase percentage for Chapter 6 tenancies is the difference in CPI between May of the current year and the preceding May. The figure published by the Bureau. They city establishes that as the allowed rent increase percentage each June.
A small and decreasing number of tenancies fall under Chapter 5 of the ordinance. For these households the city calculates the allowed maximum annual rent-increase percentage and posts that percentage each month. However due to the moratorium on rent increases the city is not posting any rent-increase percentages on the rent stabilization website.
For more information about the maximum allowed annual rent increase in Beverly Hills please read the Renters Alliance explainer. If you rent a single-family home, a condominium or an apartment in a newer rental building then please scroll down for more information.
Most Beverly Hills Renting Households Will Pay 3.9% More
According to the Bureau of Labor Statistics, this year’s May-to-May change in consumer prices for our region is 3.9%. Because that is the basis for the maximum allowable annual rent increase for Chapter 6 tenancies, most rent-stabilized households in Beverly Hills will likely see the rent rise by 3.9% once the moratorium on rent increases is lifted.
What Happens When the Moratorium is Lifted?
When the moratorium is lifted we can expect the rent stabilization division to post the allowed percentages for both Chapter 5 and Chapter 6 tenancies on the city website. However don’t know yet when city council will either end the local emergency or lift the moratorium. (Council can undertake these actions separately.)
Naturally most landlords will want to recoup the rent increase that they were not allowed to demand since last March. It seems a sure bet that as soon as the moratorium is lifted the landlord will move to raise the rent by the maximum percentage allowed. Thirty days must pass after lawful notice is served for the rent increase can take effect. Notice of a rent increase may be given any day of the month and take effect any day of the month at least 30 days later.
One unknown is whether landlords will demand a double rent increase. When city council imposed the moratorium on rent increases, councilmembers agreed to defer — but not to deny entirely — the foregone rent increase. Our reading of the ordinance would allow a landlord to demand both the deferred rent increase (3%) and the current rent increase (3.9%) to make a total potential rent increase of 6.9%. However we don’t have any guidance from the rent stabilization division on the matter and city council has not shown any sense of urgency to revisit the language of the emergency ordinance to explicitly disallow a doubled rent increase.
Read more about it: Expect a Post-Moratorium Double Rent Increase This Year.
A Note to Those Renting Single-Family Homes & Condominiums
Tenants in single-family homes, condominiums (and newer rental buildings) are likely see a greater than 3.9% increase because those properties are exempt from the Beverly Hills rent stabilization ordinance. So there is no local cap on the rent increase. State law allows as much as a 10% rent increase with 30 days notice and a higher rent increase still with 60 days or more notice.
Some tenants in such housing may benefit from the Tenant Protection Act of 2019. California enacted statewide rent control to prevent excessive rent increases and to provide protection from no-just-cause eviction for households renting multifamily housing, single-family homes and condos. However that protection extends only to housing that is owned by a corporation, including a Real Estate Investment Trust, or a limited liability company if that company is controlled by a corporation.
Single family homes and condos owned by individual(s) and/or family trusts are exempt so long as proper notice about the law was provided to tenants. Also housing constructed 15 or fewer years ago is also exempt from the Tenant Protection Act. (Read the fact sheet.)