LA Rent Control Tightens: Potential Changes for Landlords
RENT CONTROL NEWS
Overview of LA City Council's Stricter Rent Control Proposal
The Los Angeles City Council is advancing a major overhaul to the Rent Stabilization Ordinance (RSO), which applies to approximately 651,000 rent-stabilized units (primarily apartments built before October 1, 1978). This proposal, the first significant update in over 40 years, aims to cap annual rent increases at 3% with no minimum floor, eliminating certain add-ons. As landlords, this could directly impact your revenue streams and operational costs amid rising expenses like insurance and maintenance.
Key Proposed Changes
Rent Increase Cap: Annual hikes would be limited to 3% (60% of the Consumer Price Index, or CPI), removing the current 3% floor and 8% ceiling. This replaces the existing inflation-tied formula.
Elimination of Surcharges: No more 1-2% add-ons for utilities paid by landlords (e.g., gas or electricity), and bans on up to 10% increases for additional occupants like new family members or roommates.
Support for Small Landlords: The Housing Department would expand funding for repairs and rehabilitation for owners of 2-10 units, drawing from Measure ULA and LA County Affordable Housing Solutions Agency funds.
Rejected Alternatives: Proposals like a 2% floor with 5% cap or "rent banking" (carrying over unused increases) were not advanced by the committee.
Potential Impacts on Landlords
Financial Pressures: Tighter caps could squeeze margins, especially with post-COVID cost increases in insurance, utilities, and repairs. Small landlords may face challenges maintaining properties without adequate revenue adjustments.
Property Management Changes: Reduced incentives for investment or upgrades; some owners might sell properties or defer maintenance, potentially leading to higher turnover rents under Costa-Hawkins but short-term cash flow issues.
Broader Market Effects: Critics argue this ignores inflation and could result in legal challenges for not ensuring fair returns. It aligns LA with other cities' 3-5% caps but may discourage new rental supply.
Tenant Benefits (Indirect Landlord Impact): Lower hikes might stabilize tenancy but increase eviction disputes or reliance on subsidies, adding administrative burdens for landlords.
Timeline and Next Steps
Recent Action: The Housing and Homelessness Committee approved the 3% cap proposal on a 3-2 vote on November 6, 2025.
Upcoming Vote: The full City Council is scheduled to vote on the proposal this Wednesday, November 12, 2025. A minority report from opponents may be included.
Implementation: If passed, changes could take effect in 2026, following debates that started in September 2025 and a city-commissioned study.
Support and Opposition
Opposition (Landlord Perspective): Groups like the California Apartment Association and council members (e.g., Bob Blumenfield, Tim McOsker) warn of harm to small owners, potential property disinvestment, and legal risks. They favor more flexible caps like 5%.
Support: Tenant advocates, such as the Keep LA Housed Coalition, push for the 3% cap to protect affordability, citing studies showing landlords can still profit with 35% operating expenses.
What You Can Do: Consider contacting your council representatives before the November 12 vote to voice concerns, as public input could influence the outcome.
Get In Touch
If you have questions or want to discuss how this affects your portfolio, feel free to reply.
Email Me (Luca Jacoli) your feedback or questions; I'd love to hear from you
Call or Text Me on my Cell at (510) 708-2662
Disclaimer: This information is provided for general guidance and does not constitute legal advice. Please consult with a qualified accountant, CPA and attorney.