Los Angeles City Council Adopts Hike Limits on Rent-Controlled Units 50% Higher Than Pasadena’s Rate

The Los Angeles City Council Tuesday adopted an ordinance that would limit rent increases on rent-stabilized units to 4% in L.A., or up to 6% if landlords cover gas and electric costs. The hikes are significantly higher than the rent increases allowed in Pasadena by the recent vote of the Pasadena Rental Housing Board.

In Pasadena, from October 1 to September 30, 2024, local rent increases are capped at 2.75%, as the CPI increase from March 2022-2023 was at 3.8 percent.

Known as the Annual General Adjustment or AGA, the number determined by the Pasadena Rental Housing Board sets the allowable rent increase for housing in the city, as provided by the Pasadena Fair and Equitable Charter Amendment. 

The Pasadena Charter Amendment provides that rents can only be raised pursuant to the AGA or a petition by a landlord for a rent increase.

The AGA is equal to 75% of the percentage increase in the Consumer Price Index (CPI).

In Los Angeles on Tuesday, L.A. Council members voted 10-2 in a second consideration of the ordinance that is markedly higher than Pasadena’s new rules. Mayor Karen Bass will need to sign and approve the ordinance before it can be enacted.

According to L.A. Councilman Bob Blumenfield, who introduced the proposal, by using the most recent consumer price index, the formula would allow a rent increase of 4%, up to 6%, instead of what could have been a 7%, up to 9%, increase.

“So, that’s why I put that forward in committee because it didn’t change the formula. It merely changed the window that we look at that formula to make it the most updated window,” Blumenfield previously said.

The Los Angeles law would limit rent hikes for properties that are subject to the city’s rent-control law, and limit the increases from Feb. 1 to June 30, 2024, with the council expecting a report from the Housing Department in mid-December that will help better determine appropriate rent hikes for rent-controlled units going forward.

In an effort to assist mom-and-pop landlords and tenants who will be impacted by a rent increase, the council instructed the Housing Department, in consultation with the United to House LA Citizens Oversight Committee, to develop programs for the maintenance and preservation of rent-controlled units.

L.A. Council members also requested a report back on establishing a rule or policy that would help distinguish mom-and-pop landlords from corporate landlords, in an attempt to ensure small landlords can receive city resources to stay afloat.

The L.A. Council’s action was prompted by the pending Jan. 31, 2024, sunset of a pandemic-era rent freeze placed on rent-stabilized units.

Los Angeles’s Rent Stabilization Ordinance was adopted in 1979 and applies to rental housing built before 1978. It limits the allowable increase for rent-controlled units, tying rent increases to the consumer price index, a measure of inflation.

L.A. Councilman Hugo Soto-Martinez originally proposed extending the pandemic-era rent freeze, but that idea did not garner enough support.

David Kaishcyan, government affairs coordinator for the Apartment Association of Greater Los Angeles, addressed Council members during public comment at last week’s council meeting, where he said that the ordinance would pose a “serious threat” to the livelihoods of mom-and-pop rental housing providers who have struggled for four years due to the coronavirus pandemic.

He said these owners have not been able to raise rent despite an increase in mortgage interest, property insurance, city property taxes and more.

“The 4% increase is only a third of what owners would have normally received over the past four years if not for the emergency freeze imposed during the COVID-19 pandemic,” Kaishcyan said. “This reduction is unworkable for small owners with a single property. It is also a serious breach of trust that will fuel the exodus of small owners from rental housing.”

Housing advocates had urged council members to extend the rent freeze or limit the rent increase as much as possible. Many said a rent increase would lead to an increase in evictions and homelessness.

The Los Angeles County Board of Supervisors earlier in November took similar action, extending but slightly increasing a cap on rent increases allowed for rent-controlled apartments in unincorporated areas.

The board last year imposed a 3% cap on rent increases, but that cap was set to expire at the end of the year. The board voted to extend the cap until June 30, 2024, but agreed to increase the allowable rent increase to 4%.