The Just & Reasonable Program is a mechanism to obtain a fair return on the landlord’s investment in rental property. It compares the Net Income from the first year for which records are available with the Net Income in the Current Year. If the business is currently unprofitable compared with its first year of operation, a permanent rent increase adjusted for inflation may be permitted to be added to the rent to improve the property’s profitability and permit a fair return on the owner’s investment. This is also the program to use if, after only one year of ownership, the property is operating at a loss. Please note this is a calculated rent increase based on the income and expenses, not a mechanism to bring the rents to market rate.

RAC 240.00 – Just and Reasonable Rent Adjustment Commission Guidelines. These guidelines provide information on the program and the procedures followed by the department in processing a Just and Reasonable Rent Increase application. It also helps to identify which category income and expenses belong in for the application and which expenses are allowed or disallowed. For example Section 241.10: In determining operating expenses, all debt service expenses (i.e. mortgage), depreciation and expenses for which a landlord has been reimbursed or was eligible for reimbursement but failed to obtain reimbursement must be excluded.

 

Documentation Required would be as follows:

If 1977 is not your Base Year then provide a Detailed Statement as to why 1977 was not used as your Base Year and attempts made to retrieve 1977 data.

Provide clear and convincing evidence (ie copy of title report, return to sender letters)

 

Base Year (1977 or Oldest Subsequent Year of Record)

    • IRS Tax Form (i.e. Schedule E/Schedule C/Form 8825)
    • Rent Roll (List all units, Monthly Rental Amount and Total Collected per unit for the Year)

*If Base Year is within 5 years of the Current Year the same support documentation as for the Current Year applies, unless it is a prior owner’s information.

 

Current Year (Must be the Most Recent Year)

    • IRS Tax Form (i.e. Schedule E/Schedule C/Form 8825)
    • Rent Roll
    • Proof of Income
    • All Expense Invoices/Receipts and Proof of Payment (ie Gardening, Handyman, Legal Costs).
    • Utility Bills and Proof of Payment (i.e. if Current Year is 2019, make sure to include any Bills that have any of the dates from 01/01/19 – 12/31/19)
    • Property Tax Statements (i.e. if Current Year is 2019, you need 2018 for 01/01/19-06/30/19 and 2019 for 07/01/19-12/31/19) and Proof of Payment
    • Insurance Declaration Page and Proof of Payment

*If Current year is prior owner information we need their IRS Tax Form & Rent Roll.

 

How to submit an application:

Use the Just and Reasonable Rent Increase online application which applies the relevant formula and completes the calculations. Any supporting documentation should be uploaded to the online application. Any documents that you were unable to upload should be mailed and received by the Department (P.O. Box 57398, Los Angeles, CA 90057-0398) within 30 days of filling the application. For your convenience, a mailing label will be provided at the completion of the application. Please note this application has a $25 application fee. Please direct any questions about this program to HCIDLA.RentAdjustment@lacity.org.

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