Los Angeles Tightens Rent Control, Capping Annual Hikes at 4% and Ending ‘Baby Penalty’

A cap on rent hikes, and a rule change for families

When Pride St. Clair moved into a one-bedroom apartment in Hollywood six years ago, annual rent notices from their landlord became a source of dread. Under Los Angeles’ previous rent rules, increases of 7% or 8% were routine, and a roommate or new family member could trigger an additional jump of up to 10%.

“I felt like every year I was holding my breath waiting to see if I could still afford to live here,” St. Clair said. “This is a victory, but the fight is never done.”

Beginning this year, those kinds of increases will become far less common in the nation’s largest rent-controlled housing market.

In December, the Los Angeles City Council approved the first major tightening of the city’s Rent Stabilization Ordinance (RSO) since it was adopted in 1979, slashing allowable annual rent hikes on roughly 650,000 apartments and outlawing what tenant advocates called a “baby penalty” for adding children or elderly parents to a household.

Mayor Karen Bass signed the measure Dec. 23 after the council voted 12–2 to overhaul the way rent increases are calculated for rent-stabilized units, which make up about three-quarters of the city’s multifamily rental stock. The ordinance is scheduled to take legal effect in mid-January, with the new formula applied to rent hikes beginning July 1.

“For too long, renters in our city have been one emergency or one rent increase away from losing their home,” Bass said at the signing ceremony. “No parent should have to choose between buying groceries or paying the rent, or live in fear of eviction because they have welcomed a child into their family.”

What the new formula does

Under the new rules, annual rent increases on covered apartments will be capped between 1% and 4%, tied to 90% of the regional consumer price index. Even if inflation is higher, landlords will not be allowed to exceed a 4% hike; if inflation is very low or negative, they may still raise rents by at least 1%.

That replaces a longstanding structure that allowed increases ranging from 3% to 8%, linked to 100% of inflation, plus an additional 1 to 2 percentage points if the landlord paid for gas or electricity. In some situations, landlords could add up to 10% more when tenants brought new household members into a unit, including dependents.

City housing staff have found that under the old formula, allowable rent increases outpaced inflation in 23 of the last 30 years.

“Only greater supply will sustainably reduce costs across L.A., but a change to our rent stabilization formula is long overdue,” Councilmember Nithya Raman, who led the push for the update, said in a statement. “For decades, rents in our so-called ‘rent-controlled’ apartments were allowed to rise faster than inflation. Today, we took that long overdue step.”

Who is covered

The Rent Stabilization Ordinance generally covers buildings constructed on or before Oct. 1, 1978, along with newer units that replaced demolished rent-controlled housing. According to the city controller’s office, there were about 662,000 such units as of 2024, housing an estimated 1.5 million people in a city where about 53% of households rent.

Ending the “baby penalty”

The new law also changes how landlords may respond when tenants’ family circumstances change.

Previously, landlords could impose a one-time rent increase of up to 10% when a tenant added a new occupant, including a newborn child, an elderly parent, or another dependent relative. Tenant groups argued the rule punished family formation and multigenerational living.

Under the revised ordinance, landlords are barred from raising the rent when tenants add dependents under their care, including children, aging parents, and some disabled relatives. Owners may still impose up to a 10% increase for additional non-dependent adult occupants, such as roommates.

Bass and her allies have highlighted that provision as a family policy as much as a housing regulation.

“This is about protecting families who are trying to do the right thing — caring for their kids, caring for their elders — without being priced out of their homes for it,” Councilmember Hugo Soto-Martínez said at the signing. “Being able to afford rent is not a luxury — it’s a basic necessity.”

Landlords warn of unintended consequences

Landlord organizations describe the package as an overreach that will strain aging buildings and discourage investment in a city already struggling to keep up with housing demand.

The Apartment Association of Greater Los Angeles, a major landlord trade group, has called the overhaul a “severely reduced” rent formula. The group argues that limiting increases to at most 4% and shaving the inflation factor to 90% will make it difficult for many owners to keep pace with rapidly rising insurance premiums, property taxes, and maintenance costs.

“This ordinance ignores the reality that the cost to operate and maintain these older buildings is increasing much faster than 4% a year,” the association said in a notice to members. It warned that some small and mid-sized owners could respond by cutting back on repairs, seeking to withdraw units from the rental market, or selling to investors willing to accept lower returns.

Opposition on the City Council came from members John Lee and Monica Rodriguez, who both voted against final passage. Lee, who represents parts of the northwest San Fernando Valley, said the city risked undermining its efforts to attract new housing construction.

“This sends the message: Do not build here. Do not invest in Los Angeles. Do not keep your units on the market,” Lee said during the November debate. He had previously proposed allowing slightly higher increases for so-called mom-and-pop landlords, an idea the council did not adopt.

Housing pressure, homelessness, and wildfire fallout

The overhaul arrives after a turbulent period in Los Angeles housing. The region has some of the highest rent burdens in the country; city analyses show more than half of renters spend over 30% of their income on housing, and a smaller share spend 90% or more. The city and county also face one of the nation’s largest unsheltered homeless populations, with rising rents cited by researchers as a primary driver of displacement into homelessness.

Recent wildfires that burned through communities on both sides of Los Angeles County, destroying thousands of homes including multifamily buildings, have intensified pressure on existing rental stock. In a separate move last year, the county Board of Supervisors increased fines for post-disaster rent gouging to as much as $50,000 per violation.

Tenant coalitions that backed the city’s rent overhaul say those overlapping crises made the old formula untenable.

“People were already living on the brink, and then you add catastrophic fires and pandemic aftershocks,” said Kyle Nelson, research and policy director for Strategic Actions for a Just Economy, a South Los Angeles-based tenant advocacy group. “Putting real limits on rent hikes is one of the few immediate tools the city has to prevent more people from being pushed into homelessness.”

What happens next

Some economists and housing experts caution that the long-term effects of the tighter cap are uncertain. Research from other cities shows that stringent rent controls can protect existing tenants but may also reduce construction of new rental housing, encourage conversions to other uses, or lead to deterioration of older buildings if owners delay major repairs.

In St. Paul, Minnesota, a strict rent-stabilization measure approved by voters in 2021 was followed by a sharp drop in multifamily building permits, prompting city leaders to later soften some of its provisions.

Los Angeles already lags behind many fast-growing Sun Belt metros in new homebuilding. Federal data show that in the first eight months of 2025, the Los Angeles metropolitan area authorized slightly fewer new housing units than Austin, Texas, despite having more than five times the population.

Raman and other supporters say the new cap is not meant to be a substitute for building more homes, but a way to stabilize tenants while the city works on longer-term supply solutions such as zoning changes, subsidies, and faster permitting.

“Updating the RSO does not solve our housing shortage,” Raman said. “But it does give hundreds of thousands of Angelenos a reason to stay in their homes while we do the harder work of increasing housing production.”

For tenants like St. Clair, the changes may not erase years of rent anxiety, but they offer a measure of predictability in a volatile market.

“Knowing my rent can’t jump 8% or 10% in a year changes how I think about the future,” St. Clair said. “I can plan a little. I can imagine staying in my neighborhood.”

Whether the city’s bet pays off — protecting renters without deepening its housing shortage — will play out over the next several years, in the condition of aging buildings, in construction cranes or their absence on the skyline, and in the number of Angelenos who can still afford to call the city home.