The National Association of REALTORS® led a coalition of organizations to file an amicus brief in support of housing providers against the City of Los Angeles' rent stabilization ordinance (RSO) that they believe is overly burdensome. The coalition includes the California Association of REALTORS®, Greater Los Angeles REALTORS® Association, Southland Regional Association of REALTORS®, and South Bay Association of REALTORS®.
NAR has long rallied to oppose rent control and eviction restrictions on behalf of property owners across this country, including advocacy in opposition to the CDC eviction moratoriumpdf and various efforts at the state and local level opposing rent control policies. These efforts coincide with the organization’s work to build more affordable housing and support rental assistance programs that benefit housing providers and tenants.
Burden on Owners Too Great
At the heart of this dispute is the city’s long-standing RSO, originally enacted in 1979, and its recent expansion through tougher rent control and eviction restriction provisions. While many of the burdensome policies were introduced in response to the COVID-19 emergency, the city has since made them permanent fixtures—creating what housing advocates argue is an unsustainable financial burden for property owners.
The Los Angeles RSO applies to rental units in place before 1978, housing stock which many may consider to be naturally occurring affordable housing. Among the most contentious elements of the RSO are the 4% rent increase cap, mandatory tenant relocation fees, strict tenant notice requirements, and the Fair Market Rent (FMR) eviction restriction. The extension of these policies has led to some housing providers being unable to make ends meet.
Restriction Amounts to Uncompensated Taking
The plaintiffs in the case argue the RSO violates fundamental property rights and constitutional protections. The coalition supports the plaintiffs’ arguments, but focuses on the FMR eviction restriction, arguing the provision constitutes an uncompensated “taking,” in which government restrictions limit property use so severely that it becomes the equivalent of a physical seizure.
In practice, the FMR eviction restriction prevents landlords from evicting tenants who owe less than one month’s rent, but the threshold is not based on the actual rent in the lease. Instead, it uses the HUD-calculated Fair Market Rent for the Los Angeles metro area, which is often higher than what landlords are allowed to charge under the RSO, leaving landlords with no other option but to house nonpaying tenants.
The brief also explains that property owners are potentially liable to take a hit on the sale price of the units, were they to sell, because of the existing tenants that they are unable to evict which would carry over to the new owner.
In a summary of the brief, NAR shared that they “strongly oppose rent control and eviction restrictions because such measures distort housing markets, discourage investment, and impose undue burdens on property owners, especially small-scale landlords.”
