The Los Angeles City Council recently declined to move forward with a proposal that would have amended Measure ULA, the city’s high-profile transfer tax on high-value property sales. The measure, which has been closely watched by multi-family and commercial real estate stakeholders, was referred back for additional review rather than advanced toward a voter ballot.
Measure ULA took effect in April 2023 and significantly increased transfer taxes on higher-priced transactions. Property sales above roughly $5.15 million are subject to a 4% tax, while transactions exceeding approximately $10.3 million incur a 5.5% levy — a notable increase from the city’s prior transfer tax rate.
The proposal under consideration was supported by several city leaders and aimed to soften the tax’s impact on new development and certain affected property owners. Key elements included a long-term transfer tax exemption tied to certificates of occupancy for newly constructed multi-family and commercial properties, a temporary exemption for initial home sales in wildfire-impacted areas such as Pacific Palisades, and expanded flexibility in how Measure ULA revenues could be deployed.
Despite these proposed adjustments, the City Council opted not to place the amendment before voters at this time, instead sending the item back to committee for further analysis and public input. As a result, any potential changes to Measure ULA are likely delayed until a future election cycle.
Diverging Views on Measure ULA’s Market Impact
Supporters of the existing tax structure argue that Measure ULA is delivering on its core objectives. Revenue generated by the tax has been directed toward homelessness prevention programs, tenant protections, and the creation of deeply affordable housing units across Los Angeles. Advocates view the council’s decision as a reaffirmation of the policy’s intent and effectiveness.
Conversely, many in the multi-family and commercial real estate sectors contend that the tax has dampened transaction volume and development activity. Industry participants point to increased acquisition costs and compressed deal economics, particularly for apartment and mixed-use projects where total consideration frequently exceeds the tax thresholds.
City officials acknowledged data indicating a decline in multi-family permitting activity since Measure ULA’s implementation, especially for projects with more than five units. For investors, this trend highlights the growing challenge of underwriting new development in Los Angeles under the current regulatory framework.
How Multi-Family Investors Can Adapt — and Find Opportunity
While Measure ULA continues to shape transaction economics in Los Angeles, it has also accelerated a more disciplined, strategic approach among experienced multi-family investors. In many cases, that shift is creating opportunities for well-capitalized buyers willing to underwrite thoughtfully and act selectively.
Lower transaction volume has reduced competitive pressure in certain deal segments, opening the door to more constructive negotiations, longer diligence periods, and pricing that better reflects current operating realities. For investors focused on long-term holds, these conditions can improve entry basis and downside protection.
Developers and value-add operators are also adapting by rethinking deal structures — including extended hold horizons, phased execution plans, and a greater emphasis on operational efficiency. In stabilized assets, proactive expense management and incremental rent growth continue to support durable cash flow, even in a constrained regulatory environment.
Importantly, regulatory clarity — even when challenging — allows investors to price risk with greater confidence. As market participants adjust expectations, Los Angeles remains a fundamentally supply-constrained market with strong long-term housing demand. Investors who align capital strategy with policy realities, rather than waiting on reform, may be best positioned to benefit as the market normalizes.
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