Los Angeles Tightens Rent-Control Limits, Capping Annual Increases at 4%

A sweeping shift in rent rules

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

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 on Dec. 23. The law takes effect Jan. 24, but its most significant provision—a new cap on annual increases—will apply to rent hikes beginning July 1.

What changes under the new cap

Under the new system, 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 (CPI), whichever is lower.

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

The ordinance also eliminates several surcharges that tenant advocates say have quietly pushed rents higher, including:

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

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

“The city has not done enough to protect renters,” Councilmember Nithya Raman, the measure’s author and chair of the council’s Housing and Homelessness Committee, said. “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 the core formula for annual increases remained largely intact after changes in the 1980s. The ordinance covers most rental units built on or before Oct. 1, 1978, along with certain 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—about three-quarters of the city’s multifamily rental stock. Officials estimate those units house nearly half of all residents.

Tenant organizations have pushed for tighter rules for years, arguing the previous cap—especially when combined with add-ons—allowed rents to rise faster than incomes. City and academic analyses indicate more than 50% of tenant households spend over 30% of their income on rent, and roughly one in 10 spends 90% or more.

Councilmember Eunisses Hernandez, speaking during the November debate, warned of what she called an “eviction to homelessness pipeline.”

A housing crunch and heightened enforcement

The policy shift comes 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 by 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 inflows 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.”

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

Landlord pushback and economic concerns

Landlord organizations and some councilmembers warn the shift could backfire by discouraging investment 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 ordinance. Councilmember Curren Price recused himself because he owns rental property.

The Apartment Association of Greater Los Angeles, a leading landlord trade group, called the new formula “severely reduced,” arguing that lowering CPI indexing from 100% to 90%, halving the maximum increase from 8% to 4%, and eliminating adders will sharply constrain revenue growth in rent-controlled buildings.

Small landlords say that could make it harder to keep pace with rising costs and maintain properties. 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 could intensify incentives to push long-term tenants out, particularly if they fall behind.

Supply-focused housing advocates have voiced similar worries. Zachary Pitts, Los Angeles director of 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 also closely watching how the new cap 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. Analysts say that combination could make redeveloping 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 Los Angeles’ rules—now more closely aligned with other California jurisdictions that cap annual increases around 3% to 5%—are unlikely on their own to determine whether new housing gets built.

Transition timeline and household impacts

The new law includes a transitional cap as Los Angeles 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%–4% formula begins.

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

Tenant organizers say removing 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 say they will monitor eviction filings, building conditions, new construction permits and homelessness data for signs of strain or relief. Landlords and tenant groups are already signaling they plan to 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 looser 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 the decision is likely to be felt well beyond this summer’s leases.