Landlords offer cash buyouts to clear rent-controlled units in Los Angeles

In short: In some rent-controlled cities, especially Los Angeles, landlords are offering tenants large cash payments to move out so the apartments can be rented again at higher prices.

What's going on

In Los Angeles, landlords are increasingly using “cash for keys” deals, which are agreements where a tenant gets paid to leave an apartment voluntarily. It can be a way to avoid a long eviction fight and to free up a unit that has rent limits.

City data cited in local reporting showed nearly 5,000 buyout agreements were filed from 2019 to 2023. The average payment was $24,704. Some tenants have been offered much more, including $50,000, $55,000, and in a few cases $100,000 or more.

Landlords have a clear financial reason to make these offers. Once a rent-controlled unit is empty, it may be possible to rent it again at the current market price. That higher monthly rent can make the upfront buyout worth it over time, like paying a large one-time fee to unlock a higher paycheck later.

What to watch

Many renters say the money still does not go far enough, because finding a similar apartment at today’s prices can cost far more in the long run. Tenant advocates also say some offers can feel coercive, especially if they come with pressure from relocation companies or threats of eviction.

Los Angeles has rules meant to protect renters. Landlords must disclose a minimum relocation payment before making a buyout offer, and tenants can refuse and stay. Similar buyouts are also reported in other rent-controlled markets like Toronto, while reports say they are less common than before in New York due to stronger tenant protections.

Source: NYTimes