Oakland Rent Control Case Is A Slippery Slope
The Rent Board has now become the arbiter of what a property owner's fair rate of return should be.
By DANIEL BORNSTEIN, ESQ.
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Appearing before the Rent Board while representing Bay Area landlords is a routine occurrence for Bornstein Law, but there is one case we’ve been following that is not perfunctory. The Oakland Rent Board is hearing a monumental case that will have far-reaching impact for Oakland property owners, Durham-Hammer et al v. Tenants.
Mr. Durham-Hammer is a property owner that petitioned for a rent increase, as he is entitled to do under the Oakland Rent Adjustment Ordinance (O.M.C. 8.22.070), which allows an annual rent increase based on the regional Consumer Price Index. Proper notice, of course, must be served to the tenant.
Justifiable reasons to raise the rent include increased housing service costs, uninsured repair costs, and capital improvements the owner makes to the rental property. For more information, see the City’s page dealing with the subject.
The overarching purpose is to provide a “fair return” on their investment. Of course, there could not be a more ambiguous term and now, the Oakland Rent Board is the arbiter of what Mr. Durham-Hammer’s “fair return” should be. He was initially denied his petition for rent increase, which signaled an alarmingly aggressive and unprecedented stance of the Rent Board in deciding what landlords are entitled to make on their rental units.
There is no greater ally in protecting landlord rights than the East Bay Regional Housing Association, which has urged members to attend the rent board appeal hearing to share their accounts on the challenges of achieving a fair rate of return and voice concerns over new laws, ordinance changes and how rent restrictions and fees have hamstrung landlords from managing their property.
There’s many interesting details about the case at hand, but rather than getting lost in the weeds, Bornstein Law would like to share a few take-aways, and let’s not couch any words. We believe that it is unfair for a landlord to be shackled by rent control at a time when inflation and other costs make it impossible for some landlords to be able to generate a fair return on investment.
Militant tenant advocates have seemed to have been partially successful in painting Bay Area landlords as gluttonous and irresponsible. Our 23+ years practicing landlord-tenant law has proven otherwise, introducing us to many individuals that are just trying to do good for the tenants and the neighborhoods they call home. We attempted to put a human face on these decent and studious landlords and share their stories in this post.
The Bay Area housing crisis is owed to the macroeconomic forces of supply and demand. There is a shortage of housing, but property homeowners should not be penalized for it. At Bornstein Law, we find it ironic that the economic boom and ensuing housing crisis is due to our region’s incubation of high-tech companies whose purpose is to make a profit. Let’s call this a “fair rate of return”.
The population growth and attendant housing shortage of the Bay Area is due to the influx of Fortune 500 Companies and other innovative companies that call this area their home. All these companies stay here to get a fair rate of return. We should afford the same opportunity to property owners.
As the founding attorney of Bornstein Law, Broker of Record for Bay Property Group and expert witness, Daniel Bornstein is a foremost and well-respected expert in landlord-tenant disputes and other property management issues with over 23 years of experience in handling real estate and civil litigation related disputes in and throughout the Bay Area. More than a litigator, Daniel manages rental properties, assists in completing real estate transactions and is well known for his educational seminars. He is always eager to answer questions and engage with Bay Area landlords, property owners and real estate professionals. Email him today.
