The nation's largest single-family rental landlord will pay $3.7 million in civil penalties and restitution to resolve allegations that it violated California law against rent gouging, the state of Atty. Gen. Rob Bonta made the announcement Monday.
Invitation Homes, which owns 12,000 properties in California, paid rent for 1,900 tenants above the amount allowed by state law from October 2019 to December 2022, according to Bonta's office. I raised the price. The law limits annual rent increases to 5% plus the regionally adjusted inflation rate of 10%.
Under the proposed settlement filed Monday in Los Angeles County Superior Court, Invitation Homes will pay $2.04 million in fines. Bonta's office said the company is spending an additional $1.68 million to refund or credit tenants for amounts collected in excess of state rent caps and 5% interest.
“California has laws in place to protect tenants from sudden and large rent increases, and landlords must ensure that their tenants comply with these laws,” Bonta said in a statement. Ta. “The settlement announced today should serve as a reminder to California landlords to familiarize themselves with the laws and protections in place to ensure Californians have access to their homes.”
A spokesperson for Invitation Homes could not be reached for comment.
An investigation by the Attorney General's Office found that a small percentage of the rent increases imposed by Invitation Homes from the end of 2019 to 2022 violated rent cap laws, and the company identified some of the problems through its own investigation. , was found to have provided remedial action to affected tenants, Bontaz said. said the office.
It was signed by Gov. Gavin Newsom in 2019. California Rent Cap Law It's one of the most high-profile responses to the state's housing affordability problem. The law, one of the strictest rent increase restrictions in the country, applies to all multifamily rental housing except apartments built within the past 15 years.This law also applies to the rental of single-family homes Managed by companies and institutional investors This includes properties such as invitation homes, but other properties are exempt.
Currently, based on the law, Landlord can raise rent In Los Angeles and Orange County, it was just 8.8%, and in the Bay Area, it was 9.2%, but the numbers vary in other parts of California. Properties built before 2008 are affected.
Some California cities, such as Los Angeles and San Francisco, have local rent control policies. stricter restrictions on rent increases In old buildings.
Monday's settlement with Invitation Homes is the most significant enforcement action since the rent cap law went into effect four years ago. Rental organizations have criticized the law as difficult to prosecute because renters often have to self-report potential violations to local or state authorities.
In addition to the 2019 Rent Cap Act, Bonta's office prohibits Invitation Homes from raising rents by more than 10% annually during local and statewide emergency periods like the COVID-19 pandemic. It was claimed that another law had been violated.
Under the settlement, which must be approved by a judge, Invitation Homes will overhaul its policies governing rent increases in California, conduct quarterly audits and submit annual compliance reports for the next five years to judicial review. It will be submitted to the Commissioner's office.
In the wake of the subprime mortgage crisis 15 years ago, major Wall Street investment firms began to enter the single-family home rental market en masse. Several companies, including Dallas-based Invitation Homes, faced criticism That's because of high eviction rates, aggressive rent increases, and the potential to crowd out private home buyers. Advocates for single-family home rentals argue that single-family home rental companies allow tenants to live in neighborhoods they otherwise wouldn't be able to afford.
The proportion of single-family rental housing owned by major institutional investors remains small. According to recent Brookings Institution estimates, just over 3% of the totalHowever, it has a larger presence in some markets, particularly in the Sunbelt.
Invitation Homes operates 85,000 properties nationwide. The 12,000 units in California accounted for 17% of the company's $614 million in rental revenue for the three months ended Sept. 30, according to its latest report. Quarterly financial reports filed with the U.S. Securities and Exchange Commission. The average monthly rent for Invitation Homes properties in Southern California is $2,982, the highest in the nation's portfolio, according to the report.
Monday's settlement marks the beginning of what is expected to be another year of heated debate over rent control in California.Los Angeles-based AIDS Healthcare Foundation Certified initiative to be on the November statewide ballot This would allow local governments in California to enforce stricter limits on rent increases.
The landlord group defeated similar foundation-backed efforts in 2018 and 2020, outnumbering supporters by more than 2-to-1 in each campaign. It exceeded $100 million. Invitation Homes one of the major donors to an anti-rent control campaign.
