Landlords must be aware of rent control regime

Royal Gazette Online

Neil Molyneux | Published Jul 23, 2012 at 8:00 am

The objectives of Bermuda’s rent control regime are to provide tenants with security of tenure so that a court order is required to evict a tenant and also to prevent landlords from arbitrarily and unfairly increasing a tenant’s rent payments. In this column, I will address the latter objective.

Currently, residential properties with an annual rental value (“ARV”) threshold of $27,000 or less fall under the rent control regime. Previous AVR thresholds have been set at $24,000 or less, $16,200 or less and $9,900 or less.

A property can easily fall into or out of rent control, either when the threshold itself is altered, or when the ARV of a property is altered. The best way to check if a property is or has ever been rent controlled, is to contact the Office of the Rent Commissioner.

A property rented for the first time (eg a newly-constructed unit), may be rented for any amount, even if the property falls under rent control. Subsequent rent increases, whether to the same or to a different tenant, are restricted. In those cases, rent should not be higher than the rent charged to the first tenant of a rent-controlled property (even if by a previous owner/landlord) unless:

– the landlord and tenant have agreed an increase, following which the landlord has lodged notice with the Rent Commissioner, and the landlord holds a copy of such notice, duly endorsed by the Rent Commissioner, and

– the landlord has received the Rent Commissioner’s approval for an increase.

If a landlord applies for an increase to a tenanted, rent-controlled property, the Rent Commissioner consults with the tenant. If there is no tenant, then the landlord simply makes application to the Rent Commissioner, who makes the determination.

If a landlord or a tenant is dissatisfied with the Rent Commissioner’s determination, either may lodge an application for review by the Rent Commissioner. In such a case, the Rent Commissioner shall consult the Rent Increases Advisory Panel and then make his final determination.

A prospective tenant cannot agree a rent increase to a rent-controlled property. In such a circumstance, a landlord should lodge an application for increase with the Rent Commissioner.

Often a landlord does not know of the last authorised rent because the landlord is a new owner, or has simply lost track (eg with the property falling into and out of rent control over time). In the former case, a new landlord must beware if a previous landlord unlawfully increased rent, the current landlord may be penalised, even where he had no knowledge of the unlawful increase.

Contravention of rent control can result in criminal prosecution, or in a tenant’s claim for up to two years’ rent paid in excess of the controlled rent. Continue reading

Montgomery County Executive Leggett proposes 11-point renters plan

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Short of rent control, proposal seeks more transparency

by Kate S. Alexander,  Staff Writer | Wednesday, July 18, 2012

As the Montgomery County Council discusses renter rights, County Executive Isiah Leggett has offered an 11-point plan to strengthen the county’s voluntary rental guidelines.

Leggett (D) opposes rent control because it could stifle economic development and limit affordable housing stock.

Still, he said he believes changes are necessary to better serve renters.

Leggett’s plan comes as the county’s Planning Housing and Economic Development committee continues discussions of rental issues, during which Councilman Marc B. Elrich floated the idea of rent stabilization.

“I feel it is not wise to pursue that effort,” Leggett said of rent stabilization, adding “but I do believe there are things we can do.”

Leggett’s proposal would not prevent large rent increases, but rather make increases more transparent. It would give tenants more warning, justification for increases and time to find alternative housing, he said.

Mandatory reporting of rent increases, unit by unit, would be required under Leggett’s plan, as would enforcement of existing fines of up to $1,000 for landlords who do not submit a required rental survey. Data collected by the survey would be published on the Department of Housing and Community Affairs (DHCA) website. Continue reading

Santa Monica Council to Consider Rent Control Law Change

 

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By Lookout Staff

July 17, 2012 — As part of an unusually light agenda, the City Council on Tuesday will consider changing Santa Monica’s Rent Control law for only the third time in more than 30 years.

The proposed charter amendment would replace the General Adjustment (GA) formula the Rent Control Board uses to calculate how much landlords can raise rents on rent-controlled units annually.

The new formula would allow landlords to raise rents based on 75 percent of the regional Consumer Price Index (CPI), instead of basing it on a complex formula that can change from year to year depending on landlord expenses.

Landlords argue that 75 percent is not a fair return, but prefer the simpler formula.

If the council accepts the change recommended by the Rent Board, the charter amendment would be placed on the November ballot, making it the third such change since voters approved Rent Control in 1979.

West Hollywood, another major rent control area, also uses 75 percent of CPI for their GA, according to Rent Board officials.

Using the current formula, Santa Monica landlords were allowed to raise rents by 77 percent of CPI, an increase Rent Board officials said reflected the “improved cash-flow owners are experiencing as a result of vacancy decontrol.”

Last year, nine out of ten landlords had rented at least some of their formerly rent-controlled units at market rate, officials said.

Under the 1994 Costa-Hawkins Rental Act, which went into full effect in 1999, owners of rent-controlled units are allowed to raise the rent to market rate when a unit is voluntarily vacated or the tenant is evicted for non-payment of rent.

The general adjustment, however, caps the percentage a rent can be increased.

 

Source: The LookOut News

San Francisco rule would encourage building student housing

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To protect rent-controlled units, San Francisco may ban converting apartments for student-only uses and create incentives for developers of student dwellings.

Derrick Spradlin, a student at the Academy of Art University, moves out of a building on Sutter Street in San Francisco as summer break begins. Nine apartment buildings and former hotels in the Lower Nob Hill neighborhood have been converted into dorms for the school's students. (Don Bartletti / Los Angeles Times / May 20, 2012)

By Lee Romney, Los Angeles TimesJuly 9, 2012

SAN FRANCISCO — Lower Nob Hill, a once stately neighborhood whose shifting fortunes have proved a draw over the years for prostitutes and petty crooks, is buzzing with new activity.

The Academy of Art University has snatched up nine apartment buildings and former hotels in the enclave, converting them into dorms for students who pack the neighborhood’s cafes and linger on the sidewalks to smoke and skateboard.

Private landlords have gotten in on the action, renting to students who, city officials say, pay as much as 20% more for their lodgings than permanent residents do.

But with the average rent for a San Francisco studio apartment hovering around $2,000, Lower Nob Hill and the institution that transformed it are Exhibit A in a pointed policy debate over student housing.

In an effort to safeguard rent-controlled units, a proposed ordinance would ban the conversion of existing apartments for student-only uses. Passed overwhelmingly by the Planning Commission last month, the measure also would create incentives for developers of designated student dwellings. Continue reading

Grand Jury criticizes Berkeley Rent Stabilization Board

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June 26, 2012 9:27 am by Frances Dinkelspiel

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Berkeley voters passed a rent stabilization law in 1980, and the law now covers 19,000 rental units in the city. Photo: Tracey Taylor

 

A highly critical report by the Alameda County Grand Jury has found that the Berkeley Rent Stabilization Board is a “self-sustaining bureaucracy that operates without effective oversight and accountability.”

This rent board pays Jay Kelekian, its director, $183,000 a year to oversee a $4 million budget and manage just 21 employees – which is more than the city Berkeley pays its director of public works, who oversees 326 employees and has a $90 million annual budget, according to the report.

“The executive director makes an exorbitant salary that comprises nearly 5% of the entire budget of the agency,” according to the report. “The Grand Jury finds this unacceptable and concludes the board needs to reprioritize services and to reduce costs, not only in its administration but in services to the citizens of Berkeley.”

The rent board also pays its board members an “excessive” $500 a month and provides health benefits, according to the report. BRSB also spends $50,000 a year on a Sacramento lobbyist.

The Berkeley Rent Stabilization Board is able to pay its administrators so handsomely because it imposes some of the highest rental registration fees in the state, according to the report. Berkeley assesses landlords $194 per rental unit, compared to Oakland’s assessment of $30 per unit, and San Francisco’s $25 per unit assessment. While Santa Monica assesses landlords $156 per rental unit, it also permits landlords to recoup those costs from tenants by levying a $13 monthly fee. Berkeley, in contrast, does not allow landlords to recoup their costs, according to the report. Property owners can only assess tenants $4 a month for a total of $48. Continue reading

Tossed-Out $20 Tenants Turn Millionaires in Mumbai

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Residential buildings sit at Napeansea road in Mumbai, India. Photographer: Dhiraj Singh/Bloomberg

By Pooja Thakur on June 25, 2012

 

Thousands of rent-controlled tenants in Mumbai paying $20 a month, and often less, are being turned into millionaires by developers tearing down crumbling colonial mansions to build luxury towers for the rich.

South Mumbai, including a stretch of prime land hugging the Arabian Sea, has about 500 dilapidated stone structures dating back to the early 1900s with a potential redeveloped value of about $40 billion, according to Pujit Agarwal, managing director at Orbit Corp. (ORB), a Mumbai-based developer that derives about 80 percent of its revenue from redeveloping old buildings.

“For generations, most tenants were living a hand-to-mouth existence, barely making two ends meet,” said Agarwal, whose firm is one of around 75 vying to oust Mumbai’s rent-controlled residents. “Now, with redevelopment, these tenants have become multimillionaires overnight as capital values of the properties they occupied soared.”

Home prices in Mumbai have climbed to a record 10,833 rupees ($200) per square foot, doubling in three years, according to Liases Foras Real Estate Rating & Research Pvt, a research company based in the city. Continue reading

Rent control sometimes benefiting the rich

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Tuesday Jun 26, 2012 7:21 AM PT

Well-to-do people are taking advantage of the city’s long-protected practice of limiting rent increases to preserve affordable housing by using their cheap apartments as weekend getaways.

Attorney Andrew Zacks represents landlords who work with the city to push out these cheaters. He says these tenants are cynically playing the system.

“You have this class of very rich, elite people benefiting from rent control,” he said. “They have a good deal on a $500 or $800 place on Nob Hill and they use it as a pied-a-terre when they come into the city.”

Delene Wolf, executive director of the San Francisco Rent Board, is still fuming over a group from the South Bay that formed its own little housing cooperative.

“It drove me nuts,” she said. “It was four doctors and their wives. They traded off on the weekends and used it to go to the Symphony.”

Their co-op was disbanded after a 2001 law was passed that allows landlords to file a petition giving them the right to attempt to prove that the tenant is not a full-time resident.

Wolf feels the law is working and points to a decline in the number of cases heard. The first year there were 93, and the last couple of years it has averaged below 20. Continue reading