In San Francisco, the latest battle over the Ellis Act between tenant advocates and landlords embodies emotionally charged exaggerations, misplaced blame, and a blind eye to fair solutions. The Ellis Act is state legislation that simply allows rental property owners to exit the rental market to avoid bankruptcy or to move into their own rental units. There are a number of myths and misconceptions about the Ellis Act. Here are just a few:
Ellis Act evictions have drastically increased in San Francisco recently.
FALSE - The number of Ellis Act evictions in 2013 was about 120, one of the lowest in the last 15 years.
The average number of Ellis Act Evictions over the last 15 years is 192.
The Ellis Act is to blame for San Francisco’s “affordable housing crisis.”
FALSE - In a city with over 175,000 rent controlled units, there were only about 120 Ellis evictions in 2013 - that’s 0.0065%. The cost of housing in San Francisco is directly the result of a lack of housing. In 2013, there were nearly 70,000 new jobs in San Francisco, but only 112 housing units were built from 2010-2012. It’s a supply and demand problem - not an Ellis Act problem.
When an owner chooses to “Ellis” a property, tenants are thrown to the streets.
FALSE - An owner must pay hefty relocation fees and give plenty of notice to the tenant. An owner must pay each tenant in each unit $5,261 in relocation fees. If the tenant is elderly, disabled or there is a child living in the household, the owner must pay an additional $3,508, for a total of $8,769 per person, per unit. In addition, an owner must provide tenants with a minimum of 120 days’ notice prior to their eviction. If the tenant is at least 62 years of age or disabled and has lived in the unit for at least one year, the owner is required to give a one-year notice.
Owners Ellis buildings to make money in light of increased real estate values.
FALSE -There are a number of reasons why an owner decides to Ellis a building. (1) An owner with a growing family may simply want to combine units in a duplex or triplex to have more space. (2) An owner may no longer be able to make money as a landlord and does so to avoid bankruptcy. (3) An owner may simply not want to be a landlord anymore.
San Francisco is the most difficult place in the United States to be a rental property owner. Owners are subject to a multitude of onerous regulations such as rent control, just cause eviction laws, temporary and permanent relocation fees and many others. All the while, they are allowed to increase rents by only 60% of the Consumer Price Index. That comes to a 1.9% rent increase.