The City of Los Angeles has long been at the forefront of implementing rent control measures to ensure housing affordability and stability for its residents. One of the key regulations in place is the Rent Stabilization Ordinance (RSO), which governs rent increases for a significant portion of rental units in the city. As of June 2024, there have been important updates and clarifications regarding the maximum allowed rent increases under this ordinance.

Key Provisions of the Rent Stabilization Ordinance

The Rent Stabilization Ordinance (RSO) applies to most multi-family rental units built before October 1, 1978. It covers approximately 70% of all renter-occupied units in Los Angeles, including apartments, some condos, and duplexes, but excludes single-family homes. The RSO aims to limit rent increases and provide tenant protections, ensuring a stable and affordable rental market.

Annual Rent Increase Formula

Annual maximum rent increases for rental units subject to the City of Los Angeles Rent Stabilization Ordinance (RSO), effective July 1, 2024, through June 30, 2025, is 4%. State law requires landlords to provide an advance 30-day written notice for rent increases of less than 10%.

The RSO determines the maximum allowable rent increases by using the Consumer Price Index (CPI), a measure of inflation. For 2024, the City of Los Angeles has set the annual allowable rent increase for RSO units based on the latest CPI data. Here are the specifics:

* Base Rent Increase: The allowable rent increase is set between 3% and 8%, depending on the CPI. For example, if the CPI is 5.3%, the rent increase will be rounded down to 5%. If the CPI is 5.5%, it will be rounded up to 6%. However, if the CPI is 10%, the increase will be capped at 8% (see recent City Council’s Role below).

* Utility Adjustments: Landlords can add an additional 1% rental increase for each utility (gas and electric) that is paid for by the landlord. This means the maximum allowable rent increase can be up to 6% if utilities are included for 2024.

Recent Changes and Pandemic Impact

Due to the COVID-19 pandemic, rent increases for RSO units were frozen from March 2020 until February 1, 2024. This freeze was a temporary measure to protect tenants during the economic downturn caused by the pandemic. As of February 1, 2024, this freeze has expired, and landlords can now implement rent increases based on the RSO guidelines.

City Council's Role and Recent Decisions

In November 2023, the Los Angeles City Council approved a measure to limit rent increases on rent-stabilized units to 4%, or up to 6% if landlords cover gas and electric costs. This decision was made to mitigate the impact of anticipated rent hikes following the expiration of the pandemic-era rent freeze. The council also instructed the Housing Department to develop programs to assist both landlords and tenants in maintaining and preserving rent-controlled units.

Tenant Protections and Responsibilities

The RSO includes several provisions to protect tenants, such as:

* Just Cause Evictions: Landlords can only evict tenants for specific legal reasons.

* Relocation Assistance: Landlords must provide financial assistance to tenants in certain eviction scenarios.

* Security Deposit Interest: Landlords are required to pay interest on security deposits held for at least one year.

Conclusion

The Rent Stabilization Ordinance remains a critical tool in Los Angeles's efforts to manage housing affordability and stability. By tying rent increases to the CPI and setting clear guidelines, the city aims to balance the interests of both landlords and tenants. For landlords and tenants alike, staying informed about the latest regulations and understanding the specifics of the RSO is essential for navigating the rental market in Los Angeles.

If you have any more questions regarding rent control in the city or county of Los Angeles, don’t hesitate to reach out to us at info@cbicommercial.com or 310-943-8530.