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On Nov. 12, 2025, the Los Angeles City Council moved to address the city's ongoing housing-affordability crisis by voting to limit annual rent increases for Rent Stabilization Ordinance (RSO) covered units to a range of 1% to 4%. The action requires a final council vote to approve the ordinance language, but it is expected to take effect in February and carries significant implications for landlords.
The RSO applies to approximately 75% of the city's multifamily housing stock, generally covering residential buildings in Los Angeles that were built before October 1, 1978, and contain two or more dwelling units. The new 1% to 4% cap replaces the prior 3% to 8% annual limit, which in some cases allowed even higher increases if landlords paid certain utilities.
Under the updated formula, landlords may raise rent by at least 1% in low-inflation years due to the built-in “floor.” In high-inflation periods such as 2022, the allowable increase rises proportionally but cannot exceed 4%. City officials adopted this structure to provide tenants with greater predictability and prevent sharp rent spikes during volatile economic cycles while still offering landlords some level of inflation adjustment.
For landlords, however, the revised caps further narrow revenue-growth potential and may limit the ability to reinvest in aging buildings. Although the council's stated goal is to protect tenants from displacement and rapid rent escalation, landlords will need to incorporate this tighter annual range into their budgeting and investment strategy at a time when operating costs, including maintenance, insurance, labor, and utilities, continue to climb.
Landlords with RSO-covered properties will need to follow these new caps when they take effect and should monitor the city's annually published inflation index to confirm the allowable percentage each year. For properties in Los Angeles that are not subject to the RSO, owners should determine whether the California Tenant Protection Act of 2019 (AB 1482) rent-control law applies.
AB 1482 restricts annual rent increases to 5% plus the regional Consumer Price Index (CPI), up to a maximum of 10%. Some properties, such as newer construction, single-family homes owned by individuals, and certain affordable-housing units, may be exempt from both the RSO and AB 1482, making it essential for landlords to verify the correct classification before issuing any increase.
Because the applicable regulatory framework directly influences investment decisions, landlords should first confirm whether a property falls under the RSO, AB 1482, or an exemption. From there, owners can assess how the applicable rent-increase limits affect budgeting, capital-expenditure decisions, and operational priorities. As Los Angeles moves toward a more restrictive rent environment, careful compliance and forward-looking budgeting will be critical for navigating the city's evolving regulatory landscape.
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