Why a Rent Increase Pegged to 100% of CPI Favors Landlords

Since 2017 Beverly Hills has amended the rent stabilization ordinance to extended protections to Chapter 6 tenants. That includes an end to no-just-cause eviction and a relocation fee for no-fault tenancy terminations. The city also linked the maximum allowed annual rent increase to the annual change in consumer prices (CPI). Let’s look at that important change in more detail.

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Good News & Bad News on the Rent Increase

City Council recently discussed the maximum allowed annual rent increase and the good news is that we are keeping it indexed to consumer prices (CPI). A real win for tenants: inflation dictates the increase. The not-so-good news is that Council may agree to a 3.5% floor on the increase. That would give landlords an extra half-percent above the 3% floor today in low-inflation years. Why does Beverly Hills need a floor on the allowed increase at all?

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The Allowed Annual Rent Increase in Perspective

To a tenant accustomed to the 3% cap on annual allowed rent increases, the city’s announcement that the allowance has risen to 4.1% was a surprise both that the 3% changed and for the magnitude of the jump. As I explained in a recent post, the bump-up was somewhat predictable given higher inflation but the size of the jump was larger than most of us expected. The culprit? Rising consumer costs driven in part by rising rents!

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