Los Angeles Tightens Rent Caps for First Time in 40 Years, Limiting Annual Hikes to 1%–4%

For the first time in more than four decades, Los Angeles has rewritten the rules that decide how fast rents can rise in most of the city’s apartments, tightening limits on landlords in a sweeping change that will touch more than a million residents.

A new cap for rent-stabilized units

The City Council voted 12-2 in December to overhaul the formula that governs annual rent hikes in units covered by the city’s Rent Stabilization Ordinance (RSO). Mayor Karen Bass signed the measure Dec. 23. The law formally takes effect Jan. 24, but its most significant provision—a new cap on annual increases—will apply to rent hikes beginning July 1.

Under the changes, landlords of rent-stabilized units will be allowed to raise rents by between 1% and 4% a year, depending on inflation. The ceiling is set at 4% or 90% of the consumer price index, whichever is lower.

That replaces a decades-old system that permitted increases of 3% to 8% tied to 100% of inflation, plus extra percentage points in many buildings.

Surcharges eliminated

The new rules also end some little-known surcharges that tenant advocates say have quietly pushed rents higher, including:

• a 10% increase when tenants add a dependent or other household member
• 1% to 2% “utility adders” when landlords pay for gas or electricity in master-metered buildings

City officials say the move is intended to slow rent growth and prevent displacement in a city where more than half of renters are considered cost-burdened.

“The city has not done enough to protect renters,” said Councilmember Nithya Raman, who authored the measure and chairs the council’s Housing and Homelessness Committee. “We do need to make a change to this formula. It has been 40 years.”

Who is covered

Los Angeles adopted rent stabilization in 1979, but its core formula for annual increases has remained largely intact since the 1980s.

Today, the ordinance covers most rental units built on or before Oct. 1, 1978, along with many replacement units built after rent-controlled buildings were demolished.

City housing data show there are roughly 650,000 to 660,000 RSO units across Los Angeles, making up about three-quarters of the city’s multifamily rental stock. Officials estimate they house nearly half of all residents.

Pressure from tenants—and fear of displacement

Tenant groups have pushed for tighter rules for years, arguing that the old 3% to 8% cap, layered with add-ons, allowed rent to rise faster than incomes.

According to city and academic analyses, more than 50% of tenant households in Los Angeles spend over 30% of their income on rent, and roughly one in 10 spends 90% or more.

“We have had a losing group for a long time, and it is tenants,” Councilmember Eunisses Hernandez said during the November debate, warning of what she called an “eviction to homelessness pipeline.”

The overhaul arrives as the region grapples with a deep housing shortage intensified by recent wildfires that destroyed thousands of homes and hundreds of multifamily units across Southern California. State and county officials have also stepped up enforcement of post-disaster anti–price gouging laws, including higher fines for landlords who raise rents more than 10% in emergency zones.

Bass and her allies at City Hall have framed the new caps as part of a broader effort to keep people housed and reduce flows into homelessness. In public remarks backing the measure, the mayor argued that keeping rent increases predictable is essential when many residents “are one emergency away from losing their home.”

Landlord concerns: investment and maintenance

The council’s action drew national attention, including from business press outlets that cast Los Angeles as the latest major city to test stricter rent control in an era of high housing costs.

Landlord organizations and some councilmembers warn the shift could backfire by discouraging investment, particularly in older apartment stock that needs repairs.

“This sends the message: Do not build here. Do not invest in Los Angeles. Do not keep your units on the market,” Councilmember John Lee said before voting no.

Councilmember Monica Rodriguez also opposed the final ordinance, and Councilmember Curren Price recused himself because he owns rental property.

The Apartment Association of Greater Los Angeles, the main landlord trade group, has called the new formula “severely reduced.” The association argues that cutting the CPI basis from 100% to 90%, halving the maximum annual increase from 8% to 4%, and eliminating utility and additional-occupant adders will sharply reduce revenue growth on rent-controlled buildings.

Small landlords say that could leave them struggling to keep up with fast-rising costs.

“This is draconian,” one small owner told a local outlet, describing the changes as “a slap in the face” and warning that some landlords might delay roof replacements, plumbing work and other major repairs if they cannot recoup expenses through rent.

Economists have raised related concerns. Shane Phillips, housing initiative manager at UCLA’s Lewis Center, said tighter caps could lead some owners to defer maintenance “because they don’t have the money,” potentially worsening building conditions. He also cautioned that, because landlords can still reset rents to market when tenants move out, lower annual increases may create stronger incentives to push long-term tenants out if they fall behind.

Supply-focused housing advocates share some of those worries. Zachary Pitts, Los Angeles director of the group YIMBY Action, said in a statement that “unintended consequences could undermine the city’s housing goals at a time when increasing supply is critical to affordability and homelessness prevention.”

Developers are particularly focused on how the policy interacts with rules requiring replacement units on some demolished RSO sites to remain rent-stabilized unless a significant share are deed-restricted as affordable housing. Several analysts say that combination could make redevelopment of aging rent-controlled properties harder to finance.

City officials and tenant advocates counter that most new construction is exempt from rent control under California’s Costa-Hawkins Rental Housing Act, which bars cities from imposing rent caps on most new multifamily buildings and single-family homes. They also argue that aligning Los Angeles’ rent rules with those in other California jurisdictions—many of which cap annual increases around 3% to 5%—will not by itself determine whether new housing gets built.

Transition timeline

The new law includes a transitional cap as the city exits a pandemic-era rent freeze on RSO units. For annual increases taking effect between June 1, 2025, and June 30, 2026, that were not already noticed to tenants, landlords will be limited to a 3% hike before the 1% to 4% formula begins.

Household impact: doubling up without penalty

Beyond percentages and timelines, some of the most immediate changes will be felt inside households where relatives double up to make ends meet. Under the old rules, tenants could see their rent jump 10% when they added a dependent—such as a child or an aging parent—even if the total income in the unit did not increase. That provision is now gone.

Tenant organizers say eliminating those surcharges is about more than money.

“I meet people every day who pay $2,000 for a one bedroom. They can’t afford a 10% increase,” tenant advocate Cindy Moran said at a recent rally. “They also shouldn’t be punished for taking care of their family.”

What comes next

How the new limits will play out in practice may not be clear for years. Housing officials will be watching eviction filings, building conditions, new construction permits and homelessness data for signs of strain or relief.

Landlords and tenant groups are already signaling they will return to City Hall with requests for adjustments—whether that is a bonus for small owners or an even lower cap.

For now, Los Angeles has drawn a new line on rent increases for most of its apartments, replacing a loose, inflation-era formula with one of the tighter local caps in the country. In a city where a modest rent hike can push households to the brink, and where new housing remains difficult and slow to build, the impact of that decision will be felt far beyond this summer’s leases.