SoCal cities made landlords pay when rent hikes pushed out tenants. Then courts stepped in

In recent years, some Southern California cities have tried a new approach to softening the blow of large rent hikes. When landlords raised rents beyond what tenants could afford, cities required them to give those tenants thousands of dollars in relocation assistance.

But that strategy had one major problem. According to recent court decisions, it was illegal.

Following legal victories by landlord groups, the cities of L.A. and Pasadena have deleted guidance about those relocation payments from their websites and officials are no longer enforcing the requirement.

Whitney Prout, who works on legal affairs for the California Apartment Association, said the landlord advocacy group successfully argued that Pasadena's requirement illegally imposed heavy costs on landlords who raised rents to levels allowed by state law.

“It was a consequence that was imposed for exercising a legal right,” Prout said. “That is effectively the same as limiting the right that exists. And you're not allowed to do that.”

No more payments to ‘cushion the blow’

A California appellate court ruled in December 2025 that Pasadena’s relocation requirement due to rent hikes was illegal. In April, the California Supreme Court declined to review the decision. A separate case brought against L.A. later used the Pasadena case as precedent to strike down a similar requirement in that city.

Tenant advocates said the decisions mean that renters getting pushed out of their homes by large rent hikes will now have to shoulder the cost of finding new housing entirely on their own.

“It was a new attempt to protect tenants that wasn't as legally tried and tested,” said Ryan Bell, a coordinator with Tenants Together and a member of the Pasadena Rental Housing Board. “The idea was to help cushion the blow of displacement. And now that doesn't exist anymore.”

Who was getting relocation aid?

Pasadena’s relocation requirement was created by Measure H, the November 2022 ballot initiative that nearly 54% of voters passed to implement rent control and eviction protections.

Pasadena landlords would have to pay relocation assistance if they increased rents by more than 5% plus the amount of the city’s current rent control cap. Today, that limit would be 7.25%. If tenants informed their landlords that they could not afford increases above that amount, they would be entitled to relocation payments.

The protection wasn’t designed for Pasadena tenants living in rent-controlled apartments. Landlords cannot legally raise rents that much in units covered by those caps.

Instead, the relocation payments were geared toward tenants living in other kinds of housing not covered by local limits, such as single-family homes, condos and apartments built after Feb. 1, 1995.

A separate state law caps annual rent increases — currently at 8% in L.A. County — in many homes not subject to local rent control caps. But not all housing is covered by that state law.

Relocation payments still required in some cases

Though landlords no longer need to pay relocation fees when tenants are pushed out by large rent hikes, they still must pay tenants who are evicted through no fault of their own, such as in cases where landlords want to move a family member into the tenant’s unit.

The amount of relocation assistance Pasadena requires landlords to pay varies based on how many bedrooms the unit had, how long a tenant lived there, and the tenant’s age, parental status and disabilities. The payments range from $8,340 to $40,210.

The rules have worked similarly in the city of L.A., where relocation payments currently range from one month’s worth of rent up to $27,400. The rule requiring relocation payments due to “economic displacement” was created by the City Council in 2023 as the city began ramping down its COVID-19 pandemic tenant protections.

What’s changing now

Santa Monica has also required relocation payments in situations where tenants can’t afford large rent hikes. The city still lists that requirement in online documents. LAist reached out to city officials to ask if they have changed their approach to enforcing the requirement in light of recent court rulings. We did not receive a response.

In guidance on tenant protections published this month, the city of L.A. dropped information about relocation payments triggered by rent hikes. Pasadena officials removed details about the rent-hike relocation rules after LAist asked if they planned to drop the requirement, which was still described in detail on the city’s website earlier this week.

Prout, the California Apartment Association legal affairs expert, said the changes will be welcome news for landlords who felt blindsided when the rules first took effect a few years ago.

Many, she said, “were very surprised to learn that — despite the fact that they were not rent controlled — if they increased the rent more than the city wanted them to, they were facing a pretty significant potential financial consequence.”