Invitation Homes, the nation’s largest owner of single-family rentals, will pay $3.7 million to settle allegations it illegally hiked rent for hundreds of California tenants, state Attorney General Rob Bonta announced.
Invitation Homes, the nation’s largest owner of single-family rentals, will pay $3.7 million to settle allegations it illegally hiked rent for hundreds of California tenants, state Attorney General Rob Bonta announced.
The attorney general’s office says the company — which is also the single largest owner of residential property in the Bay Area — raised rents between October 2019 and December 2022 on 1,900 homes in California beyond the amounts allowed by the Tenant Protection Act.
That state law, passed in 2019, caps annual rent increases to 5%, plus a percentage change in the cost of living, up to 10%. “Californians are facing a housing crisis of epic proportion. California has laws in place to protect tenants from sudden, large rent increases, and landlords need to be diligent in ensuring that they abide by those laws,” Bonta said in a statement on Monday.
“The settlement announced today should serve as a reminder to landlords in California to familiarize themselves with the law and protections put in place to keep homes accessible to Californians.”
As part of the settlement, Invitation Homes will pay $2 million in civil penalties. The company will also refund $1.7 million to tenants who paid in excess of state rent caps.
That would represent an average payment of $895 to each of the 1,900 households impacted. By comparison, Invitation Homes’ rental revenues in California this year are expected to total $155.8 million. In addition to the 2019 rental cap law, the attorney general’s office alleged that the company had also violated the state’s price-gouging law, which bars landlords from increasing rent by more than 10% during local and statewide emergencies, such as the coronavirus pandemic.
In a statement, Invitation Homes said that its internal audits had already identified some of the issues raised before it had received an inquiry from the state. “We are pleased to reach an expeditious and mutually favorable agreement on this matter with the California Department of Justice,” company spokesperson Kristi DesJarlais wrote in a statement.
“We remain committed to serving our residents with the highest levels of service and care.” The Dallas-based company owns 85,000 homes nationwide, 4,351 of which are in Northern California — mostly concentrated in Richmond, Vallejo, Antioch, and Vacaville, according to an analysis of property records by the San Francisco Chronicle.
The company is known for buying up homes in the outer rings of metro areas where rents are rapidly increasing and renting them to families eager to move out of apartments but without the savings to buy a home.
The company’s average monthly rent in Northern California was $2,654 as of the third quarter of 2023, an increase of 4% from the same time last year. Since then, it has decreased its portfolio of homes in the region by about 100 homes, selling off more than it is buying.
Founded after the housing bubble burst in 2008, Invitation Homes originally grew its portfolio by purchasing thousands of recently foreclosed homes, starting in Phoenix, Arizona. As home prices have swelled in the last decade, the company has seen its customer base increase as more and more Americans are forced to remain renters.