Los Angeles Caps Rent Hikes for the First Time in 40 Years To Help Tenants Struggling With Affordability

Rents in Los Angeles have been sky-high for years, but it will soon be more difficult to increase them in the City of Angels.

Beginning in February, landlords of most multifamily apartments in the area will be limited to annual rent increases of 1% to 4%, based on local inflation—down from the long-standing 3% to 8% cap in place for the last 40 years.

"The measure may provide some relief to renters who want to stay in place without their rent being hiked up," says Joel Berner, senior economist at Realtor.com®. 

The median rent in the Los Angeles metro was $2,776 in November, more than $1,000 higher than the median national rent of $1,693.

However, rent in Los Angeles fell 2% overall year over year.

"Because rents are falling, this new rent control measure may not have a major effect," says Berner. "Even without it, renters in L.A. likely have the ability to find a unit with the same or lower rent payment by shopping around as the metro-level rent is on the decline."

While many people applauded this move, not everyone was in favor.

Landlords and developers oppose the measure

Many landlords oppose this rent hike cap, saying the change will make it harder for them to maintain their buildings, force them to sell, and deter the development of new apartments.

"It's going to be very difficult for people to stay in business—it's going to be a complete disaster," Daniel Yukelson, CEO of the Apartment Association of Greater Los Angeles, tells Realtor.com.

He says the rent hike cap, coupled with financing costs that have doubled and insurance rates that have skyrocketed in recent years, means that "the ability to turn the slightest profit is completely out the door and landlords are looking for the exit ramps."

Yukelson says his best friend owned 120 units in Los Angeles but sold half his portfolio and bought in South Carolina, a state that doesn't have this level of regulation.

"People are also going to Texas, Arizona, Nevada, and North Carolina," he says.

Some real estate developers are getting scared off by the new measure, too.

John Boyd, founder of the location advisory firm The Boyd Company, tells Realtor.com, "The L.A. rent cap tightening is a major red flag for investors. It's like putting up a big 'Do Not Enter' sign, scaring off the very developers the city needs to add new housing inventory."

Renters applaud the rent hike cap

The rent hike cap is welcome news to renters, who have been dealing with a housing shortage that only intensified after the January wildfires that devastated Altadena and Pacific Palisades.

"Last year at this time, the rental market in Los Angeles was anything but normal," says L.A. real estate agent Cory Weiss of Douglas Elliman Real Estate. "After the fires displaced thousands of people, demand spiked almost overnight, and rents rose faster than we’d ever seen. I think the new rent cap could actually help bring some balance back and stabilize the market."

Renter Troy Rivington, co-founder of Rivington Marx Interiors, agrees.

"I've been a renter in Los Angeles for a little more than six years, and I am currently living in a one-bedroom apartment with a size of just under 700 square feet for $2,450 per month," he says. "This, like many other renters in Los Angeles, isn't the original location where I resided. It was a move based on increasing costs."

Rivington says he believes this new rent cap is a step in the right direction.

"It’s not a complete fix but it’s definitely a win, at least for people renting who have lived here for years and just want to stay here," he explains. "It doesn't make L.A. itself affordable, but it does provide some peace of mind."

Additional protections

The measure also prohibits rent increases for additional tenants like babies or elderly family members under the care of the primary residents. 

“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,” Mayor Karen Bass said in a press release.

“In partnership with the City Council, we are enacting new tenant protections and capping the rent for apartment units protected under the City’s Rent Stabilization Ordinance. This new law protects renters while also streamlining processes and resources for housing providers so that more Angelenos can not only make the rent but live full and stable lives.”

Los Angeles City Council member Hugo Soto-Martínez said, "For the first time in 40 years, we are taking meaningful steps to ensure more Angelenos can afford to live where they work and continue to thrive in the communities they serve. It will support families and make sure people are not priced out of L.A.” 

The rent hike cap regulations don’t apply across the board, exempting single-family homes and newer apartments, and still allow rents to rise to market rates for incoming tenants.

But they will apply to the city’s 651,000 rent-stabilized apartments, which house over 1.5 million Angelenos.

Doing the math

Some economists say rent controls dampen investment and eventually result in chronic housing shortages.

"In general, rent control tends to create a scarcity of available rental units and leads to rentals not being maintained or upgraded as well as they would naturally," says Berner.

But many people champion rent control anyway.

When New York City Mayor-elect Zohran Mamdani was campaigning, he vowed to freeze rent on the nearly 1 million rent-stabilized apartments there for four years—a move that many say clinched his victory.

And Angelenos feel the pinch just like New Yorkers do.

Jennifer Claytor, the partner success manager at Best California Movers, tells Realtor.com, "We work every day with people who are forced to move from L.A. not because of desire, but because of another sharp increase in rent.

"For the average person, to afford housing in L.A. is a constant financial stress. Even a small increase can change the decision: stay or look for a cheaper area. These new rules give at least minimal predictability."