Los Angeles Rent Control Heads for New Increase Cap

Landlords in Los Angeles will soon face stricter rent increase regulations.

In early February, new rent control laws will go into effect that limit most multifamily property landlords to hiking rent by 1 to 4 percent, down from the 3 to 8 percent limit that was in place for four decades, the Wall Street Journal reported.

The new restrictions don’t apply to apartments built after 1979 when an earlier version of rent control laws first took effect. Landlords are still allowed to raise rents to market rates when new tenants move in. About 651,000 apartments, or approximately three quarters of Los Angeles’ multifamily housing stock, will be subject to the new caps on rent increases. Owners of older properties will be the most affected, though landlords of exempt apartments worry that the new rules will make it harder to secure tenants with their higher prices, according to the Journal.

“The problem facing the nation and most certainly facing our state and city is affordability, and at the core of affordability is the price of housing,” Mayor Karen Bass said at a news conference last week after signing the new ordinance. “This is a step forward.”

Average rent for a rent-controlled unit in Los Angeles is about $1,800 per month. Market-rate units typically rent for approximately $2,700.

Multifamily developers are already shying away from building new properties within Los Angeles city limits. The Measure ULA transfer tax, as well as years of rising interest rates, inflation and higher insurance costs, have pushed developers to explore building in other Los Angeles County municipalities. “It’s been death by a thousand cuts,” Daniel Yukelson, CEO of landlord trade group Apartment Association of Greater Los Angeles, told the Journal.

Case in point: In the first eight months of this year, the Los Angeles metropolitan area approved the construction of fewer new housing units than the Austin, Texas metro, despite having five times the population, according to census data cited by the Journal.

— Chris Malone Méndez