After three years of having our hands tied with the COVID pandemic and being held hostage by our own investment property, LA City announces a new ordinance that will govern us for yet another year until February 1, 2024.
It has a lot of moving parts, and dates the changes take place, along with new notice requirements, etc. LA County’s moratorium extension will govern the units in the city that are not governed by the city’s restrictions. Simply said, the county’s moratorium governs units exempt from the city’s regulations. So buckle up, folks!
With the new rules, we still can’t do anything about unauthorized occupants or unauthorized pets until February 1, 2024. What about the additional wear and tear and the potential damages this is causing?
We got back failure to allow entry starting February 1, 2023, so now they have to let us in with proper notice. Owner, please be cautious of a claim of harassment. They are offering funds to the little guy this round, so hurry up before the funds are gone as they are offering a maximum of up to 30K to the landlords owning less than 10 residential units. That is $833.00 per month for the last 3 years that we got nothing. I am not sure about how everyone has the mortgage on the property, but I can assume that payment won’t cover the mortgage. It’s too little too late.
Adding insult to injury, here comes the next bit of bureaucracy to our plate. The tenants now need to be delinquent in market rent before a landlord can start an eviction based on non-payment of rent. In the structure of things, market rent is determined by the Department of Housing and Urban Development, and these amounts will change annually. So currently, as it sits right now, here is the scale addressed by bedrooms: studio – $1534.00, 1 bedroom – $1747.00, 2 bedrooms – $2200.00, 3 bedrooms – $2888.00, 4 bedrooms – $3170.00. So what does this mean in simple English? Your tenant must be past due over this amount to start an eviction.
I see this new law in many angles as we, as landlords, come in all shapes and sizes. One perspective is that if our unit is under market rent (as most of us little mom and pops are), we have to wait until a tenant is behind the amount of the HUD market rent before we can evict. So for those of us that haven’t raised rents and really try to help our residents, we are having our foot held to the fire, and this will force us to need to increase the rent! As they demand rent control, but we can’t until this new restriction is lifted, so we as landlords are now forced to be a bank with no interest or fees allowed! So where does that leave us?
Now looking at the other side of the fence, please take note if you have a 2-bedroom unit. Your tenant now knows that they have a forced savings account, so to speak, for $2,222.00. Look at it this way: I know my landlord can’t evict me until I owe more than the required $2,222.00, so I am going to use this to my advantage and have a great Christmas for my kids or go on the cruise I always wanted to go on because my landlord can’t do anything to me until I owe $2,223.00. And when I get my income tax refund, I’ll just pay it back then, and there is no penalty to me. Please think about this as working with a vast number of tenants over the many years in property management I foresee this as a given.
When did the little guy, the small mom and pop agree to be a bank with a forced saving account for our clients (the tenant) to utilize at their whim?
Let’s talk about cause and effect real quick because of the new wage garnishment laws that start on September 1, 2023. Thanks to our governor, there will be little or no recourse for landlords, as wage garnishments will only be allowed for tenants who make more than $41.00 per hour. Unfortunately, in this industry, most people who make more than $40.00 per hour are homeowners, not tenants. So, where does that leave us? Why would we continue to rent out our homes if the tenant doesn’t pay us, and we then pursue an eviction at our expense?
While waiting for possession and bleeding money, we get the property back, but the tenant is off the hook. Why? I keep asking myself this question and can only come to the conclusion that our government is trying to eliminate us, mom and pop rental owners.