New Rent Increase Limits: What Los Angeles Landlords Need to Know
The Los Angeles County’s Board of Supervisors has approved stricter limits on rent increases for rent-controlled properties in unincorporated areas taking effect on January 1, 2025. These changes are designed to address housing affordability but have significant implications for property owners.
Key Changes:
- Annual Increase Limit: Rent hikes are now limited to 60% of the annual change in the Consumer Price Index (CPI), with a maximum cap of 3%.
- Small Property Owners: Landlords with 10 or fewer units can increase rents by up to 4% annually.
- Luxury Units: Properties renting for $4,000 or more per month as of September 2018 are permitted increases up to 5%.
For landlords, these new rules underscore a shift in the rental landscape. Reduced caps on rent increases could challenge the financial viability of some properties, especially as costs like insurance, utilities, and maintenance continue to rise unchecked.
What You Can Do About It:
Landlords who embrace proactive strategies will be better positioned to weather these regulatory changes. Here’s how to stay ahead:
1. Focus on Tenant Retention
With rent hikes limited, stable occupancy becomes even more critical. Keeping long-term tenants helps minimize turnover costs and maintain consistent cash flow. Think loyalty incentives like flexible renewal terms or modest improvements that add value without straining your budget.
2. Prioritize Cost Efficiency
Explore cost-saving measures that won’t compromise tenant experience. Upgrading to energy-efficient systems, renegotiating service contracts, or automating processes like rent collection can create savings that offset tighter revenue margins.
3. Leverage Exceptions
If your property qualifies under the small landlord or luxury exemptions, make the most of the flexibility they provide. Use the higher caps strategically to fund necessary upgrades or buffer against rising expenses.
4. Reassess Your Portfolio
The evolving market may call for reevaluating underperforming properties. Consider selling assets that don’t align with your long-term strategy or reinvesting in markets with fewer regulatory constraints.
Staying informed is critical. Make sure you’re up to date on these and other regulatory changes impacting multifamily investments.
Looking Ahead
The tighter rent caps reflect a broader trend in L.A. County and beyond: increasing regulation in favor of tenant protections. While these policies may pose challenges, they also create opportunities for landlords who adapt with strategic, thoughtful approaches. By focusing on operational efficiency, tenant satisfaction, and maximizing available exemptions, multifamily property owners can position themselves for stability in this changing landscape.
As always, staying informed and compliant is key. For landlords in unincorporated L.A. County, the time to adapt is now.
Taylor Avakian is a multifamily investment expert and the host of No Vacancy, a podcast dedicated to exploring the latest trends, strategies, and insights in the real estate market. As the founder of The Group CRE, Taylor specializes in helping landlords and investors navigate the complexities of multifamily ownership in Los Angeles.