The LA City Council approved updates to the city’s rent policy that could ease costs for renters this holiday season. While these changes provide relief for tenants, some landlords worry they could slow new rental development.
New Rent Policy by the LA City Council Lowers Rent Caps
After months of debate, the LA City Council approved a landmark update to lower annual rent increases and adjust how inflation affects them, giving renters more predictability.
Under the old rules, landlords could increase rent by a minimum of 3% per year and up to 10% during high inflation. The new policy caps annual increases at 4%.
Annual rent hikes are now limited to a 1% minimum and 4% maximum. During inflation, increases will be calculated at 90% of the Consumer Price Index (CPI), up from the previous 60%.
Under the old rules, landlords could charge extra for utilities like gas or electricity. The new policy removes this provision and also prevents rent increases when tenants add dependents, applying to units covered by the Rent Stabilization Ordinance.
It should be noted that these changes will affect around 650,000 rental units in the city. It is because these changes apply only to apartments built on or before October 1, 1978, and fall under the RSO. The rules don’t apply to newly-constructed units as they are typically exempt from the RSO.
Benefits and Concerns Related to the Changes
The debate to upgrade the Rent Stabilization Ordinance (RSO) has been ongoing for years. These changes were made to lessen the troubles faced by “rent-burdened” renters. These are renters who spend more than 30% of their income, and some even 90%, on rent.
The council believes that these changes can help make the city more affordable for renters. The council says the updates will help renters better manage rising living costs. They also believe that these rules will assist small landlords by increasing the repair/rehab funding.
However, some council members are worried about the troubles that these changes will bring. They are concerned that it may hurt the landlords’ ability to cover rising costs of utilities, insurance, and more. Some worry the changes could slow new rental construction or reduce investment in maintaining existing units.
While concerns remain, the council says the updates are designed to ease financial pressure on renters amid rising inflation.
