What Is LA City Rent Control (RSO)? A Landlord’s Guide to Navigating the Rules, Risks & Opportunities
- jaredlevine
- Dec 3, 2025
- 5 min read
Los Angeles City Rent Control (RSO) remains one of the most influential regulations shaping the multifamily investment landscape. Whether you’re a seasoned property owner or considering acquiring your first apartment building in Los Angeles, understanding how LA City Rent Stabilization Ordinance (RSO) works is essential for protecting your investment, optimizing operations, and planning long-term strategy.
As a multifamily broker advising landlords across Los Angeles County, I routinely guide owners through how RSO impacts valuation, rent increases, operating costs, and exit strategy. Below is a clear, landlord-focused breakdown of what you need to know.
What Is LA City Rent Control (RSO)?
The Rent Stabilization Ordinance (RSO) applies to most residential rental properties in the City of Los Angeles built on or before October 1, 1978. RSO restricts how much landlords can raise rents, outlines eviction requirements, and governs tenant protections.
Properties covered typically include:
Apartment buildings (4+ units)
Duplexes
Triplexes
Condominium rentals
Some single-family homes
If you own or plan to buy multifamily property in LA, confirming whether a building falls under RSO is a critical step in due diligence and valuation.
⭐ Why LA City Rent Control Matters to Multifamily Owners
Rent control significantly influences:
Annual rent increases
Operational flexibility
Capital improvement costs
Cash flow and long-term returns
Property value and buyer demand
Investors must approach RSO properties with both caution and strategy—many RSO assets still offer excellent returns with proper planning.
How Much Can Landlords Raise Rent Under RSO?
Annual rent increases are set by LAHD (Los Angeles Housing Department). Historically, rent increases fall between 3%–4%, with an additional 1% per utility paid for by landlord. As of 2024/2025, annual rent increases for RSO buildings have been temporarily regulated due to pandemic-era rules.(Landlords should verify the latest LAHD announcement.) Because rent increases are limited, purchasing a building with significant under-market rents requires strategic planning—and realistic expectations on timeline to reach market rates.
2025 LA City Council Changes: New 1%–4% Cap on RSO Rent Increases
In November 2025, the Los Angeles City Council approved the first major overhaul of the Rent Stabilization Ordinance (RSO) in decades, significantly reducing how high annual rent increases can go on rent-controlled units.Politico+1
Under the new policy:
Annual rent hikes on RSO units are now banded between 1% and 4%
The exact number each year will be tied to 90% of the local Consumer Price Index (CPI)
The extra 1%–2% “add-on” for landlords who pay gas/electric is being eliminated
What This Change Means for LA Landlords
From an owner’s perspective, this reform has real, long-term implications for building performance:
🔹 Lower ceiling on revenue growth In higher-inflation years, owners will no longer be able to track rent growth anywhere near true market and cost increases. Even if inflation is high, the cap stops at 4%, which can lag behind insurance, utilities, labor, and property tax increases.
🔹 No more utility “bump” The removal of the utility add-on means that owners who cover gas/electric for tenants lose a small but meaningful tool to offset higher operating costs.
🔹 More predictability—but at a price The 1%–4% band does create more predictable cash-flow modeling. However, the tradeoff is that long-term rent growth is structurally constrained, which can impact:
How buyers underwrite deals
What lenders are willing to do on leverage
How you plan capital improvements and reserves
🔹 Potential downward pressure on valuations When rent growth is permanently constrained, investors will price that risk in. That can mean:
Lower GRM and price-per-unit
Buyers focusing more on current in-place income vs. future upside
Some owners choosing to exit RSO-heavy portfolios and 1031 into less-regulated markets
At the same time, reduced increases and stronger tenant protections can support occupancy and reduce turnover, which still benefits long-term, buy-and-hold investors who manage expenses tightly and keep buildings in good condition.
For landlords, the key question is no longer just, “Is this a good building?” but also, “Does this level of rent control still pencil for my goals, my debt, and my timeline?”
✔️ Pros of LA City Rent Control (For Landlords)
1. Strong, Consistent Tenant Demand
RSO-restricted rents attract long-term renters, meaning:
Lower vacancy rates
More stable cash flow
Predictable occupancy
Consistency is often invaluable for buy-and-hold investors.
2. Lower Turnover = Lower Expenses
Long-term tenants typically result in:
Less wear and tear
Fewer turnover costs
Reduced marketing and leasing expenses
In a city where turnover can be expensive, stability is an undeniable advantage.
3. Below-Market Deals Can Offer Immediate Equity
Properties with long-term RSO tenants often trade at lower cost per unit, GRM, or price per foot, giving savvy investors a chance to:
Buy with built-in equity
Add value through improvements
Reposition the building over time
For investors willing to play the long game, these properties often deliver strong returns.
4. “Force Appreciation” Through Strategic Improvements
Landlords may pass through certain costs—if properly approved—such as:
Capital improvements (CIP)
Seismic retrofit
Major system upgrades
With the right approach, owners can increase revenue and improve the building without violating regulations.
❌ Cons of LA City Rent Control (For Landlords)
1. Limited Rent Increases (Below True Market Growth)
RSO caps mean revenue often grows slower than:
Inflation
Insurance increases
Utility costs
Maintenance expenses
Cash flow compression is a real concern.
2. Eviction Restrictions & Extended Timelines
RSO includes "just cause" eviction rules. Landlords must follow strict procedures when:
Removing units from the rental market (Ellis Act)
Performing owner-occupancy evictions
Handling nuisance or non-payment cases
Even valid evictions can take months and require documentation.
3. Rising Operating Costs & Compliance Burdens
LA City places requirements on:
Habitability standards
Registration fees
Relocation fees for certain evictions
Annual RSO filing
For hands-off landlords, these obligations can feel overwhelming.
4. Under-Market Rents Impact Valuation
Buyers evaluate buildings based on:
In-place income
Rent growth potential
Expense profile
Heavy rent control = reduced buyer pool, longer marketing time, and lower pricing expectations.
What This Means for Investors & Owners
Despite its challenges, RSO properties remain an essential part of the LA multifamily market. Smart operators who understand the rules can outperform by:
Identifying undervalued opportunities
Strategically renovating units
Monitoring turnover closely
Keeping inspections and documentation tight
Leveraging proper property management
When approached with the right strategy, rent-controlled assets can still generate strong long-term wealth.
Want to Know How the New 1%–4% Cap Affects Your Building?
If you own RSO property in the City of Los Angeles, the recent changes to rent control can have a direct impact on:
Your current valuation
Your cash flow over the next 5–10 years
Your refinance options
Whether it makes sense to hold, sell, or do a 1031 exchange
I specialize in helping Los Angeles and Ventura County multifamily owners understand exactly how RSO, AB 1482, and local policy changes impact their buildings—and what strategic options are available.
For a confidential, no-obligation valuation and strategy consultation:
Jared Levine
Founder & Managing Director,
JML Real Estate Group
KW Commercial – Calabasas
📍 Multifamily & Commercial Advisory – Los Angeles & Ventura County
📞 818.657.6556
Whether you’re thinking about selling, trading into a different market, or simply want a clear picture of your building’s value under the new rent caps, I’m happy to talk and help you map out a plan.
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