California officials warn against price gouging as rents soar in fire-stricken Los Angeles

People watch as the Eaton Fire engulfs a structure Wednesday, Jan. 8, 2025, in Altadena, Calif. (AP Photo/Ethan Swope)

Southern California’s expensive housing market is going to get a lot more competitive after deadly firestorms torched more than 12,000 homes and other structures in the Los Angeles area, leaving tens of thousands of people without a place to stay.

Already there are reports of rent-gouging, prompting elected leaders to issue stern warnings against the practice and pleading with the public to report unethical property owners who hike up rents above the allotted 10 per cent cap.

“You cannot jack up prices and take advantage of disaster victims, plain and simple,” said California Attorney General Rob Bonta at a news conference Thursday.

A modern three-bedroom condo in a downtown L.A. high-rise, for example, that was offered at US$5,500 a month in October popped back up on Zillow this week with a new asking rent of $8,500. On Saturday, the listing was removed.

The entire state has struggled with the twin crises of housing and homelessness, only recently starting to make inroads to build more affordable homes.

Are landlords allowed by law to increase rents?

California law prohibits price-gouging after an emergency has been declared, meaning that individuals and businesses cannot increase the price of goods and services such as gas or rentals by more than 10 per cent from before the emergency was declared.

Price-gouging is a misdemeanor punishable by up to a year in jail and $10,000 fine for each violation.

Protections related to housing are generally in effect for 30 days. But on Thursday, Gov. Gavin Newsom extended prohibitions on motel, hotel and rental housing to March 8.

Is there evidence of increased rents in the Los Angeles area?

Tenants rights and landlord association groups have called for strict enforcement against rent gougers amid media reports of obscenely high prices.

People on social media are crowd-sourcing examples of egregious increases, and even inputting their findings into a shared Google document.

A four-bedroom, four-bath house in Encino, for example, seeking renters at $12,000 a month in December was re-listed Jan. 13 with a new price of $14,000. A three-bedroom, four-bath house in L.A. listed for rent at $16,000 in September was re-listed this week at $29,000 a month.

All exceed the 10 per cent cap. By Saturday, both listings had been removed.

What help does FEMA provide to people who need housing?

Displaced people with homeowners or renters insurance can receive living expenses to stay at a hotel or rental.

The Federal Emergency Management Agency has several programs for displaced residents. It will pay for short-term stays at participating hotels and motels. It also provides cash in advance for housing through its displacement and rental assistance programs.

FEMA also reimburses out-of-pocket lodging expenses that are not covered by insurance.

What about mortgage relief for homeowners?

Newsom’s office on Saturday announced that five major bank lenders have agreed to provide mortgage relief to affected homeowners, including a 90-day grace period on mortgage payments, 90-day waiver of late fees, and 60- to 90-day moratorium on new foreclosures.

The banks are Bank of America, Citi, JPMorgan Chase, U.S. Bank and Wells Fargo.

Are housing platforms helping with anti-gouging enforcement?

Short-term rental platform Airbnb said Wednesday that hosts in Los Angeles and Ventura counties who try to raise prices by more than 10 per cent will instead receive an error message. The company is also sending reminders to hosts that price gouging during a state of emergency is illegal.

Zillow is posting “important information for renters during a state of emergency” on area rentals, informing applicants of the law.

Janie Har, The Associated Press