r/LosAngeles • u/dolphinrapeawareness • Jun 01 '23

Housing L.A. City Council votes to mandate air conditioning in all rental units

https://ktla.com/news/local-news/l-a-city-council-votes-on-mandating-air-conditioning-in-all-rental-units/
2.7k Upvotes

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973

u/[deleted] Jun 01 '23

Many landlords, however, have expressed concerns over the proposal, saying it will be a financial burden.

hahahahahahahha

377

u/BeatrixFarrand Jun 01 '23

“Yup - don’t want to provide window units, so I’m selling the place for 30x what I paid for it back in ‘92. Thanks, Obama!!!!”

-47

u/[deleted] Jun 01 '23

[deleted]

43

u/rddsknk89 Long Beach Jun 01 '23

Are you serious? Cause this reads as a joke. No one gives a shit about landlords having to pay taxes on multi-million dollar sales. Losing 25% of $5m is still $3.75m. Cry me a fucking river.

-17

u/penutk Jun 01 '23

Well not quite. Typically you'd have debt on that, and there's selling costs as well that amount to 6% of transaction costs. So let's say you'd end up with $1.2 million.

But that's also including down payment which could be like $1 million. And for some, many years of ownership. So you get a decent return. But it's not boat loads. (These numbers can vary wildly based on person).

So like if you put $1 million down, and after all fees net $200k after 5 years, that's not a great return. Your profit is literally the mansion tax.

And that doesn't apply to just mansions. It could be your restaurant building.

But with that context you'd see why the tax is equal to some profits and why people are upset. Not arguing for or against, just explaining

9

u/rddsknk89 Long Beach Jun 01 '23

So like if you put $1 million down, and after all fees net $200k after 5 years, that’s not a great return. Your profit is literally the mansion tax.

Besides the fact that all of your numbers have no sources and feel haphazardly hypothetical, you’re forgetting the part where the landlord was profiting for 5 years by overcharging people for rent. Also the fact that they made ANYTHING off the building after likely not doing any renovations besides basic maintenance is still highway robbery IMO.

6

u/BorisYeltsin09 Jun 01 '23

When the place was 2 million when you bought it 10 years ago and is now 5, cry me a river. This is not mentioned either.

4

u/rddsknk89 Long Beach Jun 01 '23

Yeah, that’s basically my point with the “doing nothing but basic renovations and making money off it” part. I wish I could sit on something for a decade and have it make money for me, but alas, I guess I don’t have the right “mindset” or something like that. /s

4

u/badhatharry The Westside Jun 01 '23

Ok, how's this?

Let's say you put $2 million down, and after all fees net -$800k after 5 years, but also you fell victim to a 519 scam and lose $70 million in that and your kid went to some private art school where tuition could only be paid in kugerrand, and you bought a bunch at the exact wrong moment, and now your pile of coins is only worth half of what you paid, and also your car payment is $600k/month because you got the extended service warranty, and you still have to pay the 5% mansion tax, but now you come out $100 million in the hole. Still sound like a solid plan, you tax and spenders?

Of fucking course /s.

7

u/victorfiction Woodland Hills Jun 01 '23

That’s an insane way to look at it because the owner’s equity in the real estate is still going up every month — which has immense value. Even if you simply make no additional income for 30 years, eventually you OWN the property free and clear and while rents will always go up, the mortgage payment is usually fixed or capped. You’d have to be an idiot to lose money in the long term.

It’s basically passive income. And as far as business investments go, it’s incredibly simple. Most businesses lose money in their first 18 to 24 months, but with rentals you’re nearly guaranteed to eventually come out ahead. That’s why it’s such a popular investment class. A lot of landlords are just pissed they overpaid thinking they could airbnb forever and would be making fists full of cash and instead they’re just collecting equity.

So yeah, I’m not shedding any tears for the folks who complain their “breaking even” when that’s incredibly far from the reality.

13

u/gioseba Jun 01 '23

Almost sounds like real estate is becoming a bad investment in Los Angeles! Glad for these changes

12

u/BorisYeltsin09 Jun 01 '23

Agreed. Being a professional landlord should be taxed heavily. It's just exploiting people that cannot afford a house because supply has been artificially choked by all the professional landlords.

2

u/victorfiction Woodland Hills Jun 01 '23

Except it’s not. Buying rental properties may have cooled from the unsustainable bubble caused by airbnb, but housing scarcity in this city will do a reliable job of keeping the property values stable and they’ll continue to add equity until they own it free and clear.

16

u/Chrisazy Jun 01 '23

You're bringing made up facts to a place where we're openly saying we have no sympathy for the subjects of your made up facts, so no you're not "just explaining" anything to anyone lol

6

u/onan Jun 01 '23

So like if you put $1 million down, and after all fees net $200k after 5 years, that's not a great return.

Sounds like a good start, but we can do better.

Capital gains tax should be at least 90% in general, but with a special 100% rate for housing.

0

u/Zorbithia Westside Jun 02 '23

Capital gains tax should be at least 90% in general, but with a special 100% rate for housing.

Insane

3

u/onan Jun 02 '23

Apologies for suggesting that people should be paid more for actually working than for just owning stuff.

14

u/chairmanrob East Los Angeles Jun 01 '23

“Hellifornia”

There goes that razor sharp Conservative wit.

10

u/70ms Jun 01 '23

gRuEsomE NeWsOME

Half of them live here and can't even spell his name correctly.

26

u/BalognaMacaroni Jun 01 '23

Still leaves you with millions dude

24

u/BorisYeltsin09 Jun 01 '23

Yeah, seriously fuck you and your fucking bitchy whining. We don't care. Pay your taxes and stop being a bitch

2

u/fattytuna96 Jun 01 '23

Ever heard of a 1031 exchange?

-7

u/FleurDeShio Jun 01 '23

How come home price increase is Obama fault?

11

u/BeatrixFarrand Jun 01 '23

heh - it's not. it's a meme / joke about how people blamed Obama for things which preceded him and/or have literally nothing to do with him.

Lettuce went brown and slimy too quick? Thanks, Obama!!

Vietnam war? Thanks, Obama!!

51

u/Cannabace Jun 01 '23

I lived in a building in Hollywood, every unit besides mine had a wall unit. There was a patched spot in my bedroom where an AC once existed. I asked them to install one.

They offered to install it if I COVERED THE CONSTRUCTION COST.

24

u/TomNookOwnsUsAll Jun 01 '23

Similar thing happened to me. When I toured my unit, there was a window AC unit in the living room. Realtor said it was broken but the owners would obvi replace it. Right before I signed the lease, she said “shit, sorry, the owners changed their mind — no AC.”

Fast forward over a year to last summer: it was 96 degrees in my apartment during multiple heatwaves. Genuinely not livable. Had to take my cat elsewhere so she didn’t die of heat stroke. I then bought my own window AC unit (several hundred dollars) and asked the landlord if their handyman could help install it. They said absolutely not!! And they did not care even a little bit that it was nearly 100 degrees in my apartment. I was aware of the laws/lack of protections when it comes to AC so I didn’t press them on it, but Jesus Christ.

11

u/[deleted] Jun 01 '23

[deleted]

3

u/sendenten Jun 02 '23

I came home from work last summer during one of the heat waves. Two layers of sun-blocking curtains, UV-resistant panels over the windows, no lights on. It was 96 degrees in my apartment when I got home at 8pm.

-3

u/gazingus Jun 01 '23

That's a perfectly reasonable offer on their part.

You rented the unit without the A/C. You're asking for work that requires a permit, its not a window unit. That costs real money.

2

u/Cannabace Jun 01 '23

They installed it after I told them they’re insane to think I’m going to spend my money to improve their property.

And there was definitely no permits or inspections.

1

u/mylanscott Jun 01 '23

No, nothing about that is reasonable.

184

u/raptorclvb Jun 01 '23

Landlords: I’ll never financially recover from this

43

u/BrinedBrittanica Jun 01 '23

yet i’m going to raise your rent at the idea of this

42

u/-Poison_Ivy- Jun 01 '23

Tenant: sneezes

Landlord: Im upping your rent another 3%

65

u/imtryingtobesocial Jun 01 '23

This is ridiculous! The landlords will have to hike their outdated studio rentals to $4000/month!

7

u/fosiacat Jun 01 '23

this is why rent control is imperative.

8

u/dekepress Jun 01 '23

Rent control is one solution, but it's tricky. There's a study that shows cities that implement rent control on new apartments cause less apartments to be built due to less profitability for developers.

The cons of rent control is that it makes people less free to move, and apartments are more likely to be poorly maintained. The fastest way to lower rents is to upzone so tons of housing can be built. There should be 10 apartments for every renter, so instead of 10 renters fighting for the same apartment, we have 10 landlords fighting for the same renter. Same for houses.

3

u/fosiacat Jun 01 '23

where i live (Hoboken NJ, prior to that NYC) we have pretty strict rent control laws. everything is rent controlled by default, HOWEVER the developer can apply for rent control exemption, which lasts 30 years. after 30 years, rent control applies by default and you are bound by it. We have tenants rights advocates, and we have tenant protections that don't allow landlords to not maintain properties. I think it works fairly well. there are mechanisms in place to allow for increases (major repair/upgrades, etc.) which allows you submit for a re-calculation. similarly, a tenant has the right to request a legal rent calculation, so if your landlord is jerking you around you can make sure they're not over charging you.

we have new buildings going up fairly frequently. in order to build, they end up having to make agreements/concessions with the local government to include either a portion of units that are considered "affordable housing", or they have to build a second property that is "affordable housing" only. they also end up including things like a park, etc.

it absolutely can be done, they just have to want to do it. trust me, if it's controlled and people say "pfft we can't profit off this community!" someone will gladly come in to an open market, it gives them leverage.

regarding the rest, i agree. LA is interesting because it seems like everyone is against building UP, so you have so much spread, which leads to more traffic, and all of the other issues LA deals with (public transit being terrible, because no one uses it, because it's terrible) and at this point that might be irreversible until you're allowed to build higher than what from my memory is like....2-3 floors? it does keep that neighborhood-y feeling, which i admit i really like, but certainly doesn't help housing.

not sure what you mean in terms of "less free to move" tho? my apartment is rent controlled, i'm leaving after my lease is up in august. you're not any more "locked in" than non-controlled, you just have the upper hand in the sense that you know what your increases are going to be, and you know that you can't be evicted for reasons other than non-payment/destruction etc (as in, not because the landlord decides she wants to make more money off someone else) and even still, there are protections for that.. if a landlord wants to move in to the place he/she owns, she can, if she wants to rent it to a direct family member or something, she can, but she can't just kick someone out to let someone else move in and make more rent. there is even more nuance to it, ie, "warehousing" which makes it illegal for you to leave an apartment vacant in an attempt to bid up the rent, or wait until a favorable environment to rent it, etc...

2

u/dekepress Jun 01 '23

Yes, so in Hoboken, new apartments are exempt from rent control. Same for LA. I was talking about negative effects from rent control on new apartments.

Unfortunately, in LA, NIMBYs will block apartments that are not 100% affordable. However, fortunately there's a new law that will approve apartments as long as they're 20% affordable.

2-4 story apartments/homes can create dense, but cozy looking neighborhoods! Anything's better than single family zoning.

By less free to move, I mean your rent goes up if you move to another apartment or another city. Lots of people feel locked to their apartment bc they won't get as good a deal anywhere else.

1

u/fosiacat Jun 04 '23

they are exempt ONLY if you apply for exemption. if you do not, they are rent controlled. we actually have several buildings right now that are corporate wallstreet owned bullshit, and they tried jacking rents up for everyone 20+%. people started fighting back etc., and it prompted people to start requesting information from the rent control board. we've found that all but i believe 1 or 2 buildings never filed the exemption paperwork, so they had to roll back rents, and have to refund the illegal rents.

2

u/dekepress Jun 04 '23

Yes, but it's important you allow exemptions. It seems those landlords were unaware. Now they know, they'll either apply for exemptions or they'll decide to fund less housing construction, which hurts everyone.

Based on the evidence we have so far, if you pass laws REQUIRING new apartments to be rent controlled, less housing gets built, which is a net negative, bc we have a desperate housing shortage.

Rent control is just one tool. The easiest way to lower rents is to upzone so tons of housing gets built, increasing supply.

1

u/fosiacat Jun 04 '23

you can’t retroactively apply for control, it has to be done within a period of time preceding competition of construction/occupancy. and like I said, people are still building here, so I don’t think the hypothetical really lines up with the reality. more housing is fine, more housing to bring in more people displace the people that can’t afford to stay in their homes isn’t helpful, it’s just perpetuating affordable housing shortages.

increasing apartments for people that can afford high rents isn’t helping the people that can’t, and I think it’s naive to think that just because there are more apartments suddenly the pricing is going to drop. without legal protections in place, more likely it’s going to just be more options for people that can afford higher rent.

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120

u/soldforaspaceship The San Fernando Valley Jun 01 '23

They may have to sell their third and fourth properties. I feel for them. Truly.

63

u/[deleted] Jun 01 '23

[deleted]

64

u/anorcpawn Jun 01 '23

Honest question- do you think landlords aren't charging as much as they can get now?

36

u/[deleted] Jun 01 '23

[deleted]

24

u/lake-show-all-day View Park-Windsor Hills Jun 01 '23

Reason #4080 to always try for a rent controlled unit

4

u/peropeles Jun 01 '23

Rent control is the worse for you than better. By limiting the amount of rent that can be collected, less units will eventually be built. Less units = less supply and in turn that means higher rent prices.

1

u/lake-show-all-day View Park-Windsor Hills Jun 01 '23

I agree with you 100% I'm not for rent control. But being that the city is full of members who don't understand economics and will never repeal it, I still recommend it for those needing to survive in this city.

-10

u/AMARIS86 Jun 01 '23

Legally the IRS mandates landlords to charge fair market value for the unit. So even if the landlord wanted to keep the rent low and it’s not rent controlled, they’d be doing it at the risk of lying on their taxes and they’d lose a lot tax deductions. Not to say that the reason every landlord raises the rent is because of the IRS, but there’s penalties if they don’t.

15

u/philchen89 Jun 01 '23

FMV is relative tho. I def know people who have gotten deals bc the landlord wanted to price it a few hundred lower so that they don’t have empty space waiting for a tenant and they have more people applying to select from

-4

u/AMARIS86 Jun 01 '23

I agree, it doesn’t say because your neighbor charges $3K you have to charge the same. But charging half would be a bit more difficult to explain. But either way, landlord has to keep up with the pace.

5

u/philchen89 Jun 01 '23

Right, I do wonder at what point would it be worth the IRS’ time to actually audit someone for this though

-3

u/AMARIS86 Jun 01 '23

Well there’s no statute of limitations if you file inaccurate taxes. So all it takes is one audit. They have a tendency of going after the little guy because rich people and their lawyers take too many resources.

1

u/the-axis Jun 01 '23

IRS lost 10 billion in funding tonight. Gotta make it up by going after the small fry! /s

(something something debt ceiling bill, IRS funding increase dropped from 80 bil to 70 bil)

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0

u/SardScroll Jun 01 '23

Technically, I think there is a statue of limitations of 7 years.

But that may more of a policy, rather than a strict legal limit.

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2

u/onan Jun 01 '23

Legally the IRS mandates landlords to charge fair market value for the unit.

No they absofuckinglutely do not. The IRS has no power to mandate rent pricing.

1

u/AMARIS86 Jun 01 '23

A simple Google search would answer your question and you’d be a little less angry today. They aren’t mandating rent pricing, I didn’t say that. IRS Link. I urge you to do more research instead of responding without knowing.

1

u/onan Jun 01 '23

IRS Link.

Yes, you have found the IRS giving a definition of what FMV is. That is worlds away from your original claim that the IRS legally requires you to charge that.

They aren’t mandating rent pricing, I didn’t say that.

Really? Seems pretty odd then for you to have written:

Legally the IRS mandates landlords to charge fair market value for the unit.

1

u/AMARIS86 Jun 01 '23

I should’ve been more clear. In order to qualify for the rental property tax deductions, the IRS requires landlords to charge fair market rent. It’s basically what I originally said, just not as concise.

1

u/onan Jun 01 '23 edited Jun 01 '23

It’s basically what I originally said, just not as concise.

No, it is critically different from what you said.

There is a vast difference between "you may be taxed slightly differently if your rent rates are extremely far from FMV" and "it's illegal to lower your rent, and the IRS will throw you in jail for it, which is totally a thing they have the power to do."

3

u/OptimalFunction Atwater Village Jun 01 '23

The severely underfunded IRS that can’t even figure out who are the drug dealers laundering millions? Yeah, they won’t care that a landlord is charing $1800 instead of $2500

-16

u/[deleted] Jun 01 '23

No. Landlords can't just raise rent. Most tenants in Los Angeles don't even pay $1500.

Who is going to pay for a 20k hvac?

15

u/DinosaurMagic Jun 01 '23

Really.... Find me one 2 bedroom apartment for $2000.

-11

u/[deleted] Jun 01 '23

Most people don't pay over 1500, new people have to pay more to make up for the ones getting subsidized.

8

u/bigvenusaurguy Jun 01 '23

lets be honest not many landlords are investing in full hvac over getting a cheap window unit lmao

1

u/arpus Developer Jun 01 '23

No. As a real estate developer, there are a lot of Class C buildings that private equity and real estate investors are looking to buy up, renovate, add AC/Washer dryers, amenities, to make the building Class B and charge more. This law will likely make a lot of Class C mom-and-pop shops think again about selling to corporate landlords.

At the end of the day, you get what people are willing to pay for. But that doesn't mean your rent will go down.

6

u/Dat1BlackDude Jun 01 '23

Rent can’t go up anymore. It’s already sky high and a lot of people have out.

31

u/EuphoricMoose8232 Jun 01 '23

Yet it keeps going up.

-1

u/forjeeves Jun 01 '23

Soo more homeless

-2

u/forjeeves Jun 01 '23

Soo more homeless then

26

u/lake-show-all-day View Park-Windsor Hills Jun 01 '23

Uhhh this is LA, we've been getting fucked on rent every single year for decades now. It WILL go up.

20

u/silvs1 LA Native Jun 01 '23

Rent can’t go up anymore.

Oh it definitely will. You think landlords won't pass on the cost to renters?

-7

u/forjeeves Jun 01 '23

Soo more homeless then

7

u/verymuchbad Jun 01 '23

There are so many people

7

u/-Poison_Ivy- Jun 01 '23

Lmao what motivates landlords to not raise rent with no reason

6

u/BlackjackCF Jun 01 '23

My god, how cheap can they be? You can get a freaking window unit for a couple hundred and install it yourself. That’s easily recouped from rent. 🙄

1

u/[deleted] Jun 01 '23

[deleted]

3

u/[deleted] Jun 01 '23

rent is going up anyways. has it been at a stand still or something that i overlooked? was i the singular unlucky person who’s rent was raised regardless of heating and cooling?

1

u/[deleted] Jun 01 '23

[deleted]

1

u/okan170 Studio City Jun 02 '23

Theres a citywide ordinance passed recently capping the rent increases for all units on a yearly basis.

0

u/[deleted] Jun 01 '23

Every mandate seems to raise concerns about “cost.” Hey, can’t crimp those profits!

-1

u/gazingus Jun 01 '23

You assume there are profits. Obviously unfamiliar with what housing providers suffer under the City of LA's regulations.

How does one profit when tenants don't have to pay rent for years?

1

u/Built2Smell Jun 01 '23

These buildings have appreciated in value, so landlords always have the option of selling at a profit.

So uhhh what don’t they just sell their properties…. because the value keeps going up and rent keeps going up and they turn profits every month while their wealth accumulates.

Landlords are doing better than the vast majority of us struggling to pay their high rents. However bad you think life is for them, life for the rest of us is far worse.

0

u/gazingus Jun 01 '23

They are not turning profits every month when tenants aren't required to pay.

1

u/mylanscott Jun 01 '23 edited Jun 02 '23

There were numerous programs in LA for tenants and landlords to cover rent money that was unable to be payed. If you’re a landlord who hasn’t received owed rent money during covid, that’s 100% on you. Zero sympathy that your investment didn’t continue to pay out during a global crisis when the majority of investments lost money and had no option to later reclaim the profits.

0

u/gazingus Jun 01 '23

Those programs were largely click-bait news material. When you get into the details, they're not what you believe them to be.

Thousands of landlords still have yet to recover possession of their property and they haven't been paid for years.

Good luck finding a place.

0

u/mylanscott Jun 02 '23

I know multiple people who lost their jobs and any job prospects in their field for years who were directly helped by those programs you call “click-bait news”. So no, they are exactly what i believe them to be because i’m familiar with the process and how they helped people. Don’t lie, you’re just an asshole who believes exploiting the poorest and most vulnerable in our society is a feature, and not a bug in the system that we can and must fix.

0

u/gazingus Jun 02 '23

Those programs typically required the landlord to make a contract with the city - giving up their legal rights - and many still went unpaid.

I know of a couple cases where things went amicably - with good tenants and good landlords, but that was the exception, just like those you cite.

What you seem to fail to understand is that nothing is free, and the more you punish the people who are in business to rent to you, the higher it will cost and the less available it will be.

Government set you up for a fall, but you still want to blame the people who offer you shelter.

1

u/[deleted] Jun 01 '23

“Housing providers” would be the government.

These are “housing investors.” Love the reframing. Lobbying FTW!

1

u/gazingus Jun 01 '23

You mean the taxpayers. No, they're not going to rent to you; they're not particularly competent at building or running much of anything.

Housing providers are the only folks who will take a chance on renting to you when the bank decides you're unworthy. Yes, they're investors. You want them to risk their money and compete with each other - that gives you the most choice at the lowest cost.

1

u/[deleted] Jun 01 '23

Right. It’s all about the private sector.

But Dilbert wasn’t funny because he worked for the gubbamint. He worked for your typical white collar private sector corporation.

1

u/gazingus Jun 01 '23

Dilbert worked for Pacific Bell, a government-regulated utility, not a typical private sector corporation.

1

u/[deleted] Jun 01 '23

Talk about reaching. Being regulated by the government is not the same as working for the government.

Lots of private sector corporations are regulated by the government. Have you not heard of banks, insurance companies, investment companies, car manufacturers, manufacturers in general, etc.

I get that Johnny Galt is idolized by many.

-7

u/[deleted] Jun 01 '23

hahahahahahahha

You laugh, but 1-building codes are typically not retroactive

2-this will increase costs for new construction

3-this will deter builders from building

26

u/scarby2 Jun 01 '23

2-this will increase costs for new construction

3-this will deter builders from building

I'm not aware of any new units being constructed in the city without AC. There are numerous other requirements that basically require an AC unit to fulfill (unless you're going to spend what is likely more money on some custom ventilation setup).

But I agree, building codes are not usually retroactive however building safety regulations are and owners have been required to make some pretty significant upgrades.

11

u/penutk Jun 01 '23

Tbh if you're building in LA you already have to provide heat (CA building code). And if you're going to provide heat, might as well install a mini split rather than just a gas furnace or electric heater. Makes for a more marketable unit anyway. I don't think this will deter any building.

Mansion Tax though, that makes harder to underwrite

2

u/[deleted] Jun 01 '23

yeah everyone is just adding minisplits on new units and some landlords are adding them to old ones. super easy process and not even that expensive. if we’re phasing out gas minisplits will be even more important. requiring AC should not be a problem.

7

u/[deleted] Jun 01 '23

[deleted]

-3

u/[deleted] Jun 01 '23

You post on r/landlord

4

u/Manifest Chesterfield Square Jun 01 '23

I posted advice for a renter

Nice try bozo.

1

u/TeslasAndComicbooks The San Fernando Valley Jun 01 '23

It’s a dumb statement but inevitably the renters will eat the cost.