Social media is flooded with reports of rent-gouging after LA fires, but it is legal?

Southern California's already expensive housing market is set to become even more competitive after a deadly fire in the Los Angeles area destroyed over 12,000 homes and other buildings, leaving tens of thousands of people homeless. Price gouging on rent has already begun, prompting elected officials to issue stern warnings, condemn the practice, and call on the public to report unethical landlords.

California Attorney General Rob Bonta stated on Saturday that it is illegal for landlords to raise rents by more than 10%. "You cannot price gouge, you cannot take advantage of a disaster, period," he said at a press conference. For example, a modern three-bedroom apartment in downtown Los Angeles that was listed for $5,500 (approximately AUD 8,037) per month in October, was relisted this week on the U.S. real estate company Zillow for a new rent of $8,500 (approximately AUD 13,728). The listing was taken down on Saturday.

California has been struggling with a dual crisis of housing and homelessness, and has only recently begun to make progress in building more affordable housing. California law prohibits price gouging after a state of emergency is declared, meaning individuals and businesses cannot raise the price of goods and services, such as gasoline or rent, by more than 10% of what they were before the emergency was declared. Price gouging is a misdemeanor punishable by up to a year in jail and a $10,000 (approximately AUD 16,128) fine per violation. Housing-related protections typically last for 30 days, but Governor Gavin Newsom extended the ban on hotels, motels, and rental housing to March 8 on Thursday.

Tenant rights organizations and landlord association groups are calling for strict enforcement against rent gougers, following media reports of exorbitant rental prices. People on social media are crowdsourcing examples of significant rent increases, even inputting their findings into a shared Google document. For instance, a four-bedroom, four-bathroom house in Encino that was listed for $12,000 (approximately AUD 19,379) per month in December, was relisted on January 13 for $14,000 (approximately AUD 22,609). A three-bedroom, four-bathroom house in Los Angeles that was listed for $16,000 (approximately AUD 25,839) per month in September, was relisted this week for $29,000 (approximately AUD 46,834) per month. All of these exceed the 10% cap. Both listings had been taken down by Saturday.

The Federal Emergency Management Agency (FEMA) offers several programs for displaced residents. It will pay for short-term stays at participating hotels and motels, and provides upfront housing cash through its displacement and rental assistance programs. FEMA will also reimburse out-of-pocket lodging costs not covered by insurance. Governor Newsom's office announced on Saturday that five major bank lenders have agreed to offer mortgage relief to affected homeowners, including a 90-day mortgage payment forbearance, 90-day waiver of late fees, and a 60- to 90-day new foreclosure moratorium. These banks include Bank of America, Citibank, JPMorgan Chase, US Bank, and Wells Fargo.

Short-term rental platform Airbnb said on Wednesday that hosts in Los Angeles and Ventura counties will receive an error message if they try to raise prices by more than 10%. The company also reminded hosts that price gouging is illegal during a state of emergency. Zillow is posting "Important Information for Renters During a State of Emergency" on regional rental listings, informing applicants of the relevant laws.