City Council recently discussed the maximum allowed annual rent increase. The good news is that councilmembers agreed to keep it indexed to the annual change in consumer prices (CPI). We can call that a win! The bad news is that Council will keep it at 100% of CPI. That generates the allowed increases of 4.1% and 3.8% (for Chapter 6 and for Chapter 5 tenants respectively). That more than is necessary to provide the landlord with a ‘fair return’ under the law.
A couple of months ago I got to thinking about how Beverly Hills calculates allowable annual rent increases. A formula tied to consumer prices long kept increases very low for Chapter 5 tenants. Indeed in a period of low inflation Chapter 5 increases long averaged about 1% annually. Then it jumped to an average of 1.7% this year in a reviving economy. But now the annual rent increase effective in August nearly doubles to 3.3%. What’s going on?
Thirty-nine years ago today, on March 27, 1979, the City of Beverly Hills enacted a “temporary system of stabilization and control of apartment rent levels.” The introduction to the Municipal Code of Chapter 5 Rent Stabilization that year was an effort to draw a line under the problem of excessive rent increases and destabilizing turnover in rental housing. Just as City Council recently observed when it adopted the original urgency ordinance last January, the cost of rental housing was moving beyond reach of residents and threatening the stability of households that rent. Then and now renters comprise more than half of all households in the city. But often protections come too little and too late. But Chapter 5 delivered for tenants.