On Tuesday, October 1st, the Los Angeles City Council’s Housing and Homelessness Committee met to consider sweeping changes to the city’s rent stabilization ordinance. While no vote was taken, the discussion underscores growing momentum toward more restrictive policies that would significantly reshape the economics of operating rent-controlled housing in LA.
What’s Being Considered:
The proposals under review would tighten rent adjustments well below real-world inflation and cost increases:
Replace the CPI-All Items Index with the CPI-Less Shelter Index, which excludes housing costs and typically yields a lower adjustment.
Lower the minimum rent increase floor from 3% to 2%.
Reduce the maximum allowable cap from 8% to 5%.
Eliminate the 1%–2% utility pass-through for landlords covering gas and electricity.
Additionally, advocacy groups are pressing the Council to go even further with a hard 3% cap or 60% of CPI (whichever is lower), a policy that would fully decouple rent adjustments from inflation and operating realities.
Economic Pushback:
A city-commissioned adjustment study last year laid the groundwork for these changes, but a peer review by Beacon Economics flagged major flaws in its methodology. Their analysis warns that the proposals lack data support and would ultimately worsen LA’s housing crisis by discouraging investment, driving up turnover costs, and further limiting supply.
Wider Policy Context:
The Oct. 1 agenda also included motions on indoor temperature thresholds and streamlined noticing procedures, reflecting the Council’s continued trend toward additional regulatory layers on housing providers. For investors, this follows years of burdensome measures — including rent freezes, eviction moratoriums, and escalating compliance costs.
Investor Takeaway:
While no formal action was taken yesterday, the committee’s direction signals heightened policy risk for multi-family assets in Los Angeles. If adopted, these rent stabilization revisions would compress NOI, limit long-term rent growth, and make it more difficult for owners to manage rising expenses in an inflationary environment. More importantly, they could shift capital away from LA toward markets where housing policy better supports investment returns.
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