Los Angeles City Council Votes To Lower Rent Caps on 650,000 Rent-Stabilized Apartments

The Los Angeles City Council voted yesterday to lower the allowable rent increases on some 650,000 rent-stabilized units in the city.

The new formula endorsed by the city council will allow landlords to raise rents by 90 percent of the consumer price index (CPI), a common measure of inflation, with a maximum allowable rent increase of 4 percent. Landlords are guaranteed a floor of 1 percent annual increase under the new rules.

Under the old rent-stabilization formula, landlords could raise rents by 100 percent of CPI, with a maximum allowable annual rent increase of 8 percent. Landlords were guaranteed a minimum 3 percent annual increase each year.

Los Angeles’ rent stabilization ordinance applies to rental properties built before October 1978. California also has a state-level rent control policy that limits landlords to increasing rents by the lesser of 5 percent plus inflation or 10 percent on buildings at least 15 years old.

The measure passed by the city council yesterday directs the Los Angeles City Attorney to draft an ordinance incorporating this new formula into the existing rent stabilization ordinance. The city council will have to vote again to enact that ordinance.

State law also guarantees landlords’ ability to raise rents to market rates on vacant units.

Proponents of Wednesday’s changes argued that the lower rent caps will enable tenants to stay in their units.

Some property owners argue the new caps will deter new construction.

City regulations stipulate that when a lot containing any rent-stabilized units are redeveloped into new rental housing, the entire new development also falls under rent-stabilization.

In this way, Los Angeles’ rent regulations do cover some portion of new construction.

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.

Politico interviewed one landlord who is abandoning his plans to convert a rent-stabilized triplex into a 48-unit development because the new project would have to be rent-stabilized as well.