Rent Hikes Restricted to 5% Near New Los Angeles Pro Football Stadium
Landlords in Inglewood, California, Limited to 5 Percent Increases During Moratorium
Inglewood, California, one of the last remaining affordable areas in metropolitan Los Angeles, is capping apartment rent increases to try to stop widespread gentrification ahead of the planned completion of a $3 billion football stadium for the Los Angeles Chargers and Los Angeles Rams and a nearby entertainment district.
The National Football League stadium and the planned Hollywood Park development, which would include about 500,000 square feet of retail and entertainment space as well as more than 2,500 residential units, are expected to bring soaring rents to the area as developers and landlords capitalize on the influx of new interest.
In an effort to offset this, the Inglewood City Council is imposing an emergency 45-day moratorium on rent hikes of more than 5 percent a year, a move that has building owners concerned whether a permanent cap could come into play later this year that would reduce their property values. The move reflects the extent of the Los Angeles County housing shortage, which is among the worst in the United States.
“The interim ordinance freezes rental increases at 5 percent per annum while the city studies the situation further,” Inglewood Mayor James Butts said in an email. “The freeze was proposed based upon an online survey placed on the city's website.” Residents reported rent hikes in the past year that ranged from 2 percent to 138 percent, according to Butts, who said he negotiated to reduce two of the rent increases. The new measure, which could be extended, blocks landlords from being able to continue to substantially raise rents.
Historically, Inglewood has had lower rents than other parts of the area around Los Angeles, the nation's second-largest city, with average market rents about $1,261 a month, according to CoStar Market Analytics. By comparison, the average rate for all of Los Angeles County is $1,898 while the average rate for popular West Los Angeles around Beverly Hills is about $2,955 a month.
It makes Inglewood one of the few remaining affordable cities in Los Angeles County.
“After years of advocacy, we are proud to have gotten the city to take this important step to send the message to corporate landlords that rent gouging is not okay in the city of Inglewood,”
D’Artagnan Scorza, member of neighborhood group Uplift Inglewood Coalition, said in a statement. “While it’s only temporary, this moratorium begins an effort to protect mom and pop landlords, families, seniors and veterans from the threat of displacement.”
The moratorium applies to apartment buildings built after 1995 and excludes condos and single-family homes.
The ordinance also includes protections for renters from "Just Cause" evictions, which allow landlords to evict residents for nonpayment of rent or for breaking the law. If there is rent control after the 45-day moratorium, it could pose some challenges for owners, especially if they were looking to sell in this hot market.
“Anytime you enact rent control, the value of properties goes down just because it’s regulated,” said Kitty Wallace, executive vice president at Toronto-based global commercial real estate services firm Colliers International.
There is an increase of paperwork to consider and “some clients don’t want to buy rent control properties because they have a difficult time underwriting them because you can’t keep up with the market,” Wallace said. She said she knows the area well, having sold her very first multifamily property in Inglewood 20 years ago when the area was more of a stagnant community that failed to attract most buyers.
However, given all of the current projects underway in the city, many people will still be interested in buying properties there. But values are likely to be affected, according to Wallace.
Apartment real estate investment firm Universe Holdings, based in Century City, California, purchased its ninth multifamily property in Inglewood in January, a 15-unit complex, called Chateau Park Casino Royale V at 232 W. Olive St.
Inglewood is one of the largest multifamily areas around Los Angeles, with about 46,500 units, according to CoStar Market Analytics. About 90 percent of the units are located in 1 & 2-Star properties.