Los Angeles has laws limiting yearly rent increases, ensuring tenants aren’t unfairly priced out of their rental homes. Though increases (and evictions) were frozen during the pandemic, restrictions were lifted in 2024, allowing landlords to proceed with increases and “just cause” evictions.
Properties subject to the current Rent Stabilization Ordinance (RSO) include any property built before October 1, 1978, or buildings constructed to replace RSO-controlled buildings. The (RSO) limits rent increases based partly on the Consumer Price Index (CPI).
The landlord is allowed to raise the rent to market value if a tenant moves. Increases are currently capped at 4% during a tenancy, with an additional 1% added if utilities are provided. Further increases may be allowed for specific purposes, such as significant upgrades or capital improvements, or after a legally mandated retrofit.
Rental properties in unincorporated cities and mobile homes in Los Angeles County may have lower increase caps.
However, while these limits may be better for tenants, they can potentially put property owners in a challenging position. As utility, insurance, and maintenance costs continue to rise, some properties may become financially inviable, putting tenants and property managers in a pickle.
If tenants feel their rights have been violated under the RSO, they can file a complaint with the LA Housing Department, which may lead to litigation, fines, and damages awarded to the tenants. The resulting negativity may impact your ability to attract tenants, putting the property’s financial and reputational health at risk.
Implications of Rent Control for Property Managers and Owners
Though rent control is meant to keep housing accessible, it may also make fulfilling responsibilities as a property owner or property manager in Los Angeles more challenging. If you struggle to meet day-to-day maintenance expenses, you may be challenged to keep tenants or face conflict with the ones who stay due to poor maintenance or reduced services.
Additionally, rental properties may become a less desirable investment vehicle if the income doesn’t make sense compared to operational costs.
The best defense is to budget wisely, be more discerning about new tenants and their potential for long-term tenancy, and work a little harder to ensure residents are happy and secure. Ultimately, investing time and effort now can offset reduced income in the future.
Strategies for Property Managers to Address Rent Control Challenges
Even though you can raise the rent when a tenant leaves, you’ll still have to find new tenants, which can be challenging and costly.
Investing in tenant retention is always a smarter strategy. Here are a few ideas that can help you retain tenants in LA:
1. Prioritize communication.
Be transparent with your tenants. Keep them informed of changes and ensure they know how hard you work to make their building a great place to live. By fostering open dialog, you establish trust and respect. Respond quickly to maintenance requests and listen to their thoughts and ideas to show them you value their tenancy.
2. Optimize operating costs.
Examine vendor contracts and service agreements to ensure you get the best deal for your dollars. You may be able to renegotiate some agreements at a lower cost or eliminate services you don’t use. If possible, shop around for new quotes or redistribute tasks to full-time workers.
3. Take advantage of additional rent increases when possible.
If your building needs upgrades, apply for increases to cover your costs. Significant capital improvements justify additional increases and can help you raise property values and your tenants’ living standards.
4. Focus on amenities that improve property value
Upgrades and amenities like EV charging stations, fitness centers, high-speed internet, smart home tech, and pet-friendly spaces are highly desirable to Los Angeles renters and will have the dual benefit of supporting tenant retention and attracting good tenants.
5. Leverage exemptions where you can
If your property is an area that allows luxury property exemptions, it gives you more flexibility in terms of how much you can increase the rent. You can use the higher caps to fund improvements or otherwise invest back into the property.
6. Adopt a more stringent tenancy screening policy
Credit and reference checks are standard for landlords, but most will agree these details don’t always tell the whole story. Someone can look great on paper but end up being a combative or unreliable tenant. Take a marketing approach to new tenant screening. Don’t rely solely on electronic checks. Interview them personally to get a feel for who they are as a human and use your observations to find the best fit—not just on paper, but for the good of the community.
How Property Management Companies Help
In the wake of today’s economic uncertainty, businesses and consumers everywhere are tightening belts and sharpening pencils. While life certainly goes on, apartment and multi-family property management companies and owners must be acutely aware of renter sentiment, what attracts good tenants, and what drives their tenancy decisions.
Far from just being a rent collector, property management companies also provide financial reporting and forecasting and help plan for future improvements.
Property management companies in Los Angeles oversee day-to-day maintenance, ensuring the property is as beautiful, safe, and comfortable as it can be. They respond proactively to maintenance needs to preserve property values, reducing the risk of more costly repairs or replacements.
As the legal and regulatory landscape changes, it’s essential to have an expert in your corner who is on top of legislative changes and can adjust if needed. Property managers like Belwood have deep industry expertise and can help to successfully navigate the complexities of rent control ordinances, compliance, and tenant relations.
Property managers are the first line of defense when it comes to upholding applicable laws, including RSO, RSTPO, Fair Housing, and compliance standards set out by the Los Angeles Housing and Community Investment Department (HCIDLA).
Expert management is especially critical for properties under the Rent Stabilization Ordinance as it ensures sound financial management, compliance, and expert oversight in case of disputes.
Bottom line—if concerns about rent control are keeping you up at night, working with an experienced property management company can help. Speak to Belwood Properties today to request a proposal. We’d love to show you how we can help.
