los Angeles Significantly Limits Rent Increases on Hundreds of Thousands of Apartments
LOS ANGELES, CA – The Los Angeles City Council voted yesterday to lower allowable rent increases on approximately 650,000 rent-stabilized units across the city. The new policy, intended to bolster tenant protections, adjusts the formula used to calculate annual rent adjustments for properties built before October 1978.
Under the newly endorsed formula, landlords can now raise rents by 90 percent of the Consumer Price Index (CPI), with a maximum increase of 4 percent. A guaranteed minimum annual increase of 1 percent is also included. Previously, landlords could increase rents by 100 percent of CPI, capped at 8 percent, with a floor of 3 percent.
The change comes alongside existing state-level rent control policies,including California’s AB 1482,wich limits rent increases to the lesser of 5 percent plus inflation or 10 percent on buildings at least 15 years old. State law also allows landlords to raise rents to market rates on vacant units.
Proponents of the measure argue the lower caps will help tenants remain in their homes. However, some property owners contend the new restrictions will discourage new construction, notably redevelopment projects involving rent-stabilized properties. City regulations require that any new rental housing built on a lot containing rent-stabilized units also be subject to rent stabilization.
“By lowering allowable rent increases on rent-stabilized units, Los Angeles’ new rent caps will make projects that redevelop rent-stabilized housing into larger developments less attractive,” the article states.
Politico interviewed one landlord who has abandoned plans to convert a rent-stabilized triplex into a 48-unit development due to the requirement that the new project also be rent-stabilized.
The City Attorney is now tasked with drafting an ordinance incorporating the new formula into the existing rent stabilization ordinance, which will require a second vote by the City Council for enactment.
