In a move aimed at stabilizing the state’s rental market, California has introduced new rent control measures that will take effect on July 1, 2025. These measures, which affect both Los Angeles City and County, are designed to address rising housing costs and protect tenants from sharp rent increases. The new laws have been a long time coming, as California grapples with an ongoing housing crisis marked by soaring rents, increased evictions, and a severe shortage of affordable housing.
New Rent Control Laws: What You Need to Know
Under the new regulations, the Los Angeles Rent Stabilization Ordinance (LARSO) will limit rent increases for certain properties, particularly in older buildings built before 1978, which make up the bulk of Los Angeles’ rental stock. The new rules stipulate that landlords can increase rents by no more than 4% annually, with an additional 1% allowed if they are covering the cost of gas or electricity utilities.
For unincorporated areas of Los Angeles County, the rules are slightly more restrictive, with rent increases capped at 3% per year for most rental units. Additionally, landlords of properties with fewer than 10 units may face more lenient regulations, but even these smaller buildings are subject to limits on rent hikes and new tenant protections. The measures also include provisions for stronger eviction protections, particularly for low-income tenants and those living in rent-controlled units.
The new rent control laws are a response to the growing affordability crisis in Los Angeles and other parts of California. As the state continues to experience rapid population growth, rising rents have made it increasingly difficult for many residents to find affordable housing. The situation has been exacerbated by the lack of new affordable housing construction, a shortage of which has pushed up rents in many areas.
The Political and Legal Landscape
The passage of these new rent control measures comes after years of debate and controversy over how to best address California’s housing crisis. Advocates for tenants’ rights have long argued that rent control is a necessary tool to ensure housing affordability, especially in high-demand cities like Los Angeles. They contend that rent control prevents exploitation by landlords who increase rents far beyond the reach of working-class families.
On the other hand, property owners and developers have argued that rent control measures can have unintended negative consequences, such as discouraging investment in new rental housing and creating a disincentive to maintain existing rental properties. Some landlords are also concerned that the new regulations could further complicate an already challenging regulatory environment.
Despite these concerns, the California state government has doubled down on its commitment to tenant protections, particularly as the state faces a severe homelessness crisis. California’s growing homelessness problem, which has reached crisis levels in cities like Los Angeles and San Francisco, is directly linked to the lack of affordable housing and escalating rental costs.
Implications for Tenants and Landlords
For tenants, the new rent control measures are a welcome relief. Many renters, especially those in low-income neighborhoods, have been subjected to sharp rent hikes in recent years, making it difficult to keep up with rising living costs. The new laws offer protection from predatory rent increases and give tenants more stability in an increasingly volatile market.
However, tenants will need to understand their rights and responsibilities under the new laws. For example, landlords are still permitted to increase rents in certain situations, such as when they make significant improvements to the property or if they can demonstrate that the increase is necessary to cover rising costs. Tenants will need to stay informed about their rights to prevent being overcharged.
For landlords, the new regulations mean a reduction in the flexibility they once had in setting rents. While many property owners have long expressed concerns about the limits imposed by rent control, the new rules may force them to reconsider their rental strategies. In some cases, landlords may be incentivized to sell their properties or convert them to other uses, such as condominiums, in response to the restrictions on rent increases.
In response to concerns from both sides, California state officials have also implemented new support measures for landlords, such as tax incentives for those who improve the energy efficiency of their rental properties and enhanced tax credits for developers building affordable housing.
Looking Ahead: What’s Next for California’s Housing Market?
The new rent control measures are part of a broader effort to address California’s housing crisis. While the measures will provide some relief to tenants in the short term, experts agree that they are not a panacea. Long-term solutions to California’s housing affordability issues will require significant investment in new affordable housing construction, changes to zoning laws, and increased support for affordable housing development.
As the new rent control measures come into effect in July 2025, it remains to be seen how the rental market in Los Angeles will adapt. One thing is certain: the ongoing challenges of affordability and housing supply will continue to be a focal point of debate and policy in California for years to come.
