LA could cap rent hikes next year to 2% under new city rent control recommendations

Los Angeles housing officials have released a long-awaited report recommending changes to the city’s rent control policies.

If adopted by the city council, the new proposals would considerably lower rent hikes next year for the 42% of L.A. residents who live in rent-controlled housing.

The L.A. Housing Department’s recommendations stem from an economic study commissioned by the city and first published by LAist, which obtained it through a public records request. That study found that L.A.’s existing rules have allowed annual rent increases to outpace inflation at rates substantially higher than what is permitted in most other California cities with rent control.

Breaking down the proposed changes

Annual rent increases are always determined by how high or low inflation has been running in the L.A. area.

The housing department’s November report makes a host of recommendations for changing the formula, including:

• Reducing the maximum annual allowable rent hike from 8% to 5%. 
• Lowering the floor on rent increases — the minimum landlords can charge every year, even if their costs are not rising — from 3% to 2%.
• Removing a provision that lets landlords increase rents by another 1% if they cover a tenant’s gas bill, plus an additional 1% if they also pay for electricity.
• Changing a key part of the formula for how increases are determined: inflation. Instead of basing it on the Consumer Price Index that includes housing, the city would use the index that excludes it. Rising housing costs play a big role in inflation, as you can see in the chart below.

The report recommends considering changing which version of the consumer price index is used to calculate allowable increases to one that excludes housing costs, shown as "Less Shelter" in the chart above.

(

Courtesy Equitable Rent report

)

What this could mean for renters next year

The upshot of all these changes is that allowable rent hikes, which currently range from 4 to 6% depending on whether landlords cover utility costs, could be lowered next year to 2% starting in July. That number is based on more recent inflation data, which has been trending lower.

Some things to keep in mind: The city’s rent control ordinance only applies to apartments built before Oct. 1, 1978. Because so much of L.A.’s housing stock is old, the rules cover about 75% of city apartments. The caps on increases generally do not apply to single-family homes. Landlords also face no restrictions on raising rents when tenants move out and units become vacant.

Tenant groups are pushing for lower caps

Tenant advocates have been pushing the L.A. City Council to enact rules that would never let increases exceed 3%. They’ve highlighted findings in the study commissioned by the city showing that a majority of L.A. tenants are burdened by high rents, with about one-in-ten paying more than 90% of their income on rent alone.

“The department’s recommendations don’t go far enough to protect tenants,” said Faizah Malik, managing attorney of housing justice initiatives for Public Counsel. “Every percentage point matters for tenants, and even a small increase can mean the difference between tenants staying in their homes or being displaced and ending up on the street.”

Luis Asturias, a renter in West Adams who has lived in his rent-controlled apartment for 29 years, said he was recently laid off from his job of more than three decades with an automotive tool supplier.

“On top of that, one week later, we got a call from the landlord,” Asturias said. “They want to make a deal with us. They want us to leave.”

Asturias said he worries about his and his wife’s ability to stay in this apartment if the city continues allowing rent increases of up to 8%, or even 10% if landlords cover utility costs.

“That'll be too much,” he said. “Not just for me — for a lot of people I know. And that will put a lot of people on the streets.”

Landlords say city is “doubling down” on failed policy

Landlord advocates have said lowering these caps could drive small property owners to sell their buildings, or spend far less on upgrades and new appliances in aging apartments.

Fred Sutton, a spokesperson for the California Apartment Association, called the proposals “potentially drastic” and said the timing is strange considering that California voters — including a majority in L.A. County — shot down a ballot measure attempting to expand rent control.

“Voters overwhelmingly rejected these types of policies in Prop. 33,” Sutton told LAist in an email. “Doubling down on a failed price control ordinance is not the leadership this city needs. Yet the city continues to disincentivize investment in housing.”

Los Angeles banned increases in rent-controlled apartments for nearly four years during the COVID-19 pandemic, far longer than other cities. The economic report commissioned by the city also noted that operating expenses have risen faster than inflation for landlords, especially property insurance costs, which have just about doubled since 2020.

Sutton said, “Anything that fails to account for the specific costs of managing and maintaining rental properties in L.A., while reducing financial flexibility, will inevitably make housing more expensive and harder to find.”

L.A. City Councilmember Eunisses Hernandez speaks at a tenant rights rally outside city hall.

(

David Wagner

/

LAist

)

What happens now?

None of these changes will take effect until they’re approved by the L.A. City Council, where elected leaders could introduce tweaks of their own. Council members in the city’s progressive wing recently showed up at a rally alongside tenants calling for a 3% cap.

Councilmember Eunissess Hernandez, who attended the rally with councilmembers Nithya Raman and Hugo Soto-Martinez, said if small landlords are genuinely struggling financially, the city should explore ways to help them that don’t involve raising rents on struggling tenants.

“They can keep raising their rent, but then they're calling us because there's people experiencing homelessness down the block from their property,” Hernandez said. “We can help everyone. We just need to be surgical and intentional.”

For many L.A. tenants, their last rent hike happened on Feb. 1, 2024, when the city’s COVID-19 rent freeze expired. Because landlords are allowed to raise rents once per year, the next rent increase is just around the corner for many. It remains to be seen if the city council can adjust the rent control formula before landlords start sending 30-day rent increases notices next year.

Earlier this week, the L.A. County Board of Supervisors voted to limit annual rent increases to 3% next year for apartments subject to rent control in unincorporated parts of L.A. County. However, they allowed higher increases for small landlords.