Affordable housing is one of the most pressing issues these days in major American cities. It seems that the more money and work available in places like New York and San Francisco and Austin is accompanied with less and less affordable housing for people living in those cities. Income inequality means that only a few people get to enjoy a city’s “improvements.” There are supposed to be some basic laws to curtail the abuse of greedy landlords. Rent control has taken hits for the last few decades in every major city and the results are unsurprisingly terrible for everyone except landlords. San Francisco is truly leading the pack when it comes to cartoonish levels of housing expenses, with the median rent for a 2-bedroom apartment being just about $5,000 a month. That’s not a typo. Every day unbelievable stories rise out of the Bay Area housing world that you have to read to believe. Whether it is two nuns who feed the homeless getting an almost 200 percent rent increase out of nowhere, or something more astronomically unsound:
A San Francisco man is fighting to stay in his apartment, after his landlord suddenly hiked his rent from $1,800 a month to $8,000.
The tenant has appealed this incredible rent hike to the city, but it may be too late. He may find himself out of his apartment before the city's rent board decides if it's legal or not. One thing is certain -- it's one of the highest rent increases in recent history in San Francisco.
[My emphasis]
How did this happen?
Hutchinson told SFGATE his apartment is three bedrooms and in deplorable condition. When he moved into the apartment in 2010, he signed a lease and was living with roommates. The master tenant moved out in July 2015, and he says the landlord is now claiming that he's not on a lease.
"They've accepted money from me," Hutchinson said. "I filled out an application. They are saying the lease is not applicable to me. As far as I'm concerned the rent control should apply to me."
Based on the information above, Mr. Hutchinson is probably shit out of luck. Why? Because of the Costa-Hawkins Act of 1995.
This statute, which became effective in 1995, marked a major turning point for the housing industry. In the late 1980s and early 1990s, terrified apartment owners watched as cities such as Berkeley, Cotati, East Palo Alto and West Hollywood adopted what was known as “vacancy control.” Vacancy control means that even if a unit is vacated, the rent remains fixed at a governmentally mandated price. Thus, in cities with vacancy control, owners would have to register their units with the local rent boards, and the registered rent would become the allowable amount that could be charged regardless of who lived in the unit. Hence, there would be no such thing as fair market rent or potential “up side” for investors.
Not surprisingly, San Francisco’s government quickly became enamored with the notion of full rent regulation and began implementing vacancy control. However, this effort was halted when local and state industry leaders collaborated to draft and pass Costa-Hawkins. Indeed, former SFAA President Merrie Turner Lightner was instrumental in drafting this legislation.
Thanks to Costa-Hawkins, owners can now set the rental rate of vacant apartments to whatever rent they want. Units are not registered with the local rent board, and the government cannot tell an owner what to charge for a vacated unit. Some of our friends who own rent-controlled units in New York City are not so lucky, as this jurisdiction still suffers from vacancy control.
What that means in Mr. Hutchinson’s case is that because he was not the “original” leaser in this rental, now that the original leaser is gone, the apartment unit can be considered vacant and will not be covered by rent control laws. Hutchinson’s best chances are probably getting some kind of bargain going (if it’s affordable to him), or we pass this story around and shame the crap out of the landlord and maybe something in the vein of human decency appears.
Monday, Jun 27, 2016 · 9:05:58 PM +00:00
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Walter Einenkel
Brought up by a commenter, if the landlord accepted payments from the tenant, and cashed those payments, this potentially sets up a defense for Mr. Hutchinson. The Costa-Hawkins act does not tell you how to set the market rate rent and if, after the “Master tenant” leaves, you accept a certain level of payment from the remaining tenant, it can be argued that you set the “market rate” at whatever that payment ends up being.
