MONTHS OF City Council effort to balance tenant protections against the need for more and better housing in Los Angeles have produced a narrowly tailored proposal to close a subtle loophole in rent-stabilization laws. The council should pass it.At issue is the limited nature of rent control. California law permits apartment owners to set initial rents at whatever the market will bear. For pre-1979 housing stock, the city caps annual increases based on the economy and the housing market (the figure will move up one percentage point to 5% on July 1). When the tenant moves out, rent resets to market rate, and increases are again subject to annual percentage caps. Newer apartments have no controls on rent increases.
Any owner who wants to get out of the rental business and use the property for some other purpose can do so — but can't use that right as a ruse to evict low-rent-paying tenants one day and stock up with new tenants paying market rate the next.
What happens, though, if the owner certifies an intention to leave the rental business, evicts the tenants, demolishes the building, erects a new one and starts renting out apartments again in the same place? The owner invested in a new project — but also obliterated the need to ever again be subject to rent laws. The city's stock of stabilized apartments is diminished forever.
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