West Hollywood’s rent stabilization ordinance saves a typical rent-stabilized tenant roughly 5% to 45% off of market rent. From the tenant’s perspective, that means his current rent would go up 5% to 80% if he had to pay the market rate. That’s according to a new analysis by WeHo by the Numbers, based on data from the city’s annual housing reports. The savings were calculated for tenants in various situations by estimating their current rent-stabilized rent versus a market-rate “replacement” rent.
Rent stabilization limits annual rent increases – but not move-in rents – for covered units. Over the years, the maximum allowable increases have ranged from 0% to 4%. When market-rate rents rise faster, tenants in rent-stabilized units pay less than they would if they were living in a non-rent stabilized apartment. The recent growth in market-rate rents is factored into the savings estimates.
The analysis shows that long-term tenants can experience significant savings on rent. The average tenant who moved in 20 or more years ago (before 1996) would pay about 80% more than his current rent to replace their apartment at today’s market rates. If the tenant has a two-bedroom apartment, that means about $1,100 a month in savings from rent stabilization.
Savings can also be realized over shorter tenancies. It’s estimated that people who have lived a year or so in a rent-stabilized two-bedroom apartment are paying 5% less than that apartment would rent for if it came on the market now. Market-rate rents are an estimated 25% higher than the rent-stabilized rent after five years and 33% more after 10 years. For a typical renter, that’s about $600 a month in savings after 10 years.
The savings estimates differ based on apartment size. The analysis looked at four hypothetical tenants who each moved into his or her rent-stabilized unit in 2001. The relative difference between rent-stabilized rent and market-rate rent is highest for the tenant in a studio apartment: the equivalent of 50% of current rent. It is the lowest for the tenant in the two-bedroom apartment: the equivalent of 34% of current rent.
There is another way to look at these numbers: they are estimates of the rent increases that some tenants face when they have to move out of their rent-stabilized apartments. They might need to move, for example, because of family changes, because the owner is going to move in, or because the property is being redeveloped (sometimes called being “Ellis’ed”).
For example, the average tenant who has lived in a rent-stabilized apartment for 20 or more years might really face an 80% rent increase if he or she had to move. For a two-bedroom unit, that’s an extra $1,100 a month in rent. Even if the tenant were able to downsize to a one-bedroom, it could be an extra $500 a month. Of course, some tenants in this situation may be eligible for the city’s affordable housing programs.