April 14, 2022 2:51 PM
by Daniel J. Costello
The Santa Monica Rent Control Board has released its 2021 Annual Report summarizing developments during the year and presenting detailed information about the status of controlled rental housing in Santa Monica. The report includes a section on the impact of market-rate vacancy increases showing median rents for tenancies started last year by neighborhood and by unit size as compared to earlier years. Also included is information on the impact market-rate rents have had on housing affordability and the financial benefits of remaining in rent-controlled units over time. Another part of the report details the effects of the Ellis Act, which allows property owners to withdraw residential rental units from the housing supply. Major activities and statistical overviews are also provided for the agency’s Public Information, Hearings, and Legal departments.
Among the report’s notable findings are:
- At year-end, there were 27,484 units currently subject to the rent control law. Thousands more are potentially subject to the law when temporary use exemptions expire or units withdrawn under the Ellis Act are rented again.
- The number of units rented to new tenants in 2021 (3,693) was the highest in the past 12 years. Not only was it nearly 50 percent higher than the number rented in 2020, but about one-third higher than the average number of re-rentals over the past 12 years.
- Median initial rents for units rented in 2021 were lower than those with tenancies starting in 2020. Median initial rents for 1-bedroom units and 2-bedroom units, which together comprise 82 percent of all controlled units, were down 7.1 percent and 6.0 percent respectively. The median initial rent for 1-bedroom units was $2,300, and the median initial rent for 2-bedroom units was $3,009.
- Twenty-three percent of controlled units are occupied by tenants who moved in before 1999, and nearly twice as many (45 percent) are occupied by tenants who moved in since 2016
- An income of nearly $110,000 would be needed for a 4-person household to afford a one-bedroom unit if rented at the median market rate, using the Department of Housing and Urban Development’s standard that a unit is affordable if it requires no more than 30 percent of a household’s income.
- A net 2,066 units have been withdrawn from Santa Monica’s rental housing market by owners using the Ellis Act to go out of the rental housing business. However, in 2021, at least in part due to eviction moratoria that prohibited displacement of tenants during the pandemic, fewer units were withdrawn than were returned to residential rental use.
- As a percentage of units by city area, Ellis withdrawals have historically been highest downtown, where a third of rental units have been withdrawn. Many new units have been built downtown, but they are not subject to rent control. Also, as a percentage of units in the area, the Pico neighborhood has seen the lowest percentage withdrawn (three percent). While this is historically the case, 18 of the 28 units (64 percent) starting the Ellis process in 2021 were in the Pico neighborhood.
- The agency’s mediation services have proven very effective in resolving issues between tenants and landlords. Sixty-one percent of petitions for rent decreases, filed for maintenance issues or the removal of amenities, were fully or partially resolved in mediation. Construction-related rent decrease petitions and excess rent complaints each saw a 92 percent success rate when referred to mediation.
- Twenty-five buyout agreements were recorded during the year for tenants who voluntarily vacated their units in exchange for a payment. The number was three higher than in 2020 but less than half the average filed between 2015 and 2019. The average buyout amount recorded was $37,714.
Daniel J. Costello
Public Information Manager