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On February 1, 2024, the City of Los Angeles will allow rent increases to rent-controlled properties for the first time since 2020. Tenants should expect a four-to-six percent rent increase to go into effect across the city. “Lots of people are going to be surprised that their rent is increasing for the first time in four years,” says Matt Lucido, co-founder and CEO of Yardsworth, an innovative real estate company that buys unused portions of backyards to create new housing in California.

California and the City of Los Angeles both have rent control laws. In LA, the “Rent Stabilization Ordinance” (RSO) controls the size of annual rent increases on covered units for existing tenants.

How rent control works in Los Angeles City

“The RSO provides rent control protections to units built on or before October 1, 1978,” Lucido says. This is approximately 656,000 units across 118,000 properties.

Under the RSO, the Los Angeles City Council sets any annual rent increases for existing tenants. “They base their decision on a range of economic factors, including the Consumer Price Index and overall economic conditions in the city,” Lucido explains.

In the ten years leading up to the COVID-19 pandemic, from 2010-2020, the City Council allowed an annual rent increase of three percent each year on average. “Three percent is actually the lowest annual rent increase RSO permits, though they can elect to go higher,” Lucido says.

Statewide, the relevant rent-control law is AB 1482. 

How rent control works in the State of California

CA’s AB 1482, also known as the Tenant Protection Act of 2019, went into effect on January 1, 2020, right before the start of the COVID pandemic. “AB 1482 caps annual rent increases for existing tenants in covered buildings at five percent plus inflation,” Lucido says.

The law applies to apartments and other multi-family buildings containing two or more units in California that are over 15 years old. “There are some exceptions to this rule,” Lucido says. “Single-family homes and condos aren’t subject to rent control unless they are owned by a corporation, real estate investment trust, or limited liability company in which at least one member is a corporation. Duplexes are also exempt if the owner occupies one of the units.”

While AB 1482 does not override local rent control rules, it does layer on top of them. As Lucido explains: “For example, an LA City apartment building built in 1980 wouldn’t be covered under LA’s RSO since it was built after RSO’s October 1978 cut-off, but it would be covered by the state mandate since it’s older than the 15-year cutoff for AB 1482. Similarly, an LA City apartment building from the 1920s will be governed by RSO and not AB 1482. Tenants need to understand which law, if either, governs their rent increases so they can ensure they are getting a fair shake with any potential rent increases.”

How the pandemic affected rent control

In March 2020, the Los Angeles City Council issued a rent freeze. “Suddenly, for the first time since the RSO’s introduction in 1978, landlords could no longer issue an annual rent increase,” Lucido explains. “This was a welcome event for renters across Los Angeles. In particular, people suffering job loss under COVID didn’t face rent increases that would have exacerbated their situations.

“Unfortunately, many mom-and-pop landlords — approximately 30% of landlords — were facing rapidly escalating costs due to inflation and were unable to raise rents to cover increased maintenance, interest, and utility costs.  As you’d imagine, the freeze had people energetically pushing for its continuation and for its termination, depending on whether they were renters or landlords,” he says.

The ordinance stated that the rent freeze would remain in effect until “one year after the end of the local emergency period.”

“The official local end date for the City of Los Angeles; COVID-19 pandemic’s local public health emergency officially ended on February 1, 2023,” Lucido says. On November 14, 2023, the City Council voted 10 to 2 to allow rent increases starting February 1 of this year.

How rents are going to change

For the first time in four years, tenants in the City of Los Angeles rent-controlled apartments will shoulder a price hike. “A four percent increase will go into effect across the city’s RSO-covered rent-controlled units,” Lucido says. “Landlords who include electricity, gas, or both in the rent can raise rents by even more. If one utility is included, rents can be raised by five percent, and if two are included, they can raise the rent by six percent.”

According to the Los Angeles Housing Department, landlords are required to give tenants 30 days advance notice of a rent increase. For those who would like to check the allowable rent increase on their property, Lucido recommends consulting an online RSO rent increase calculator.

Solving the California housing crisis

“As rent increase letters fill the mailboxes of millions of LA tenants this month, it’s an urgent reminder of the dire need to solve the root of the housing crisis in California — we need more housing, and we need it now,” Lucido says. 

According to Lucido, the housing shortage is the main reason rents have gotten out of hand in LA and throughout the state. “Governor Newsom has repeated for years now that the state needs 3.5 million new housing units by 2025 but is far from reaching its goal, and we’re less than a year away from that target deadline,” he says. “This highlights the urgent need to create housing in any creative way possible.”

Companies like Yardsworth help to solve the housing crisis by empowering single-family homeowners to take advantage of CA’s new housing laws. “We subdivide their lot in two, buy the empty part, and build much-needed housing on the new lot,” Lucido explains. “This creates additional housing while providing a tremendous economic stimulus to homeowners. We effectively pay homeowners six figures to stay in their homes.”

Homeowners interested in learning their yard’s worth should contact Yardsworth and request an offer. “Yardsworth offers for backyard land are typically in the $150,000 to $200,000+ range across Los Angeles,” Lucido says. “California homeowners have a gold mine in their backyards.”

At the same time, Yardsworth’s projects help get rental prices back under control. As Lucido explains, “Creating housing at scale and improving the supply-demand imbalance is the only way to right this ship.”

Published By: Aize Perez