Rents set to increase 7% in February for many LA tenants. What you need to know:
What’s happening
On February 1, 2024, the City of LA’s pandemic-era rent freeze ends, opening the door for price increases as high as 7% in rent-stabilized apartments, plus an additional 1% each for gas and electric if utilities are included in the rent. It will be the first rent increase since March of 2020, and the biggest jump the city’s seen in Rent Stabilization Ordinance (RSO) units for decades.
Why is this a big deal?
Nearly 600,000 apartments in the city are rent-stabilized, so any increase could impact hundreds of thousands of tenants, if not millions. (You can look up whether your City of LA apartment is rent-stabilized here. Enter the address and then look under the “Housing” tab.) At the same time, three out of four renters in the city are considered “rent-burdened,” according to the U.S. Census Bureau, meaning they spend at least a third of their income on rent. Tenant advocates fear that a 7% increase could be catastrophic for tenants on the financial edge.
Larry Gross, head of the Coalition for Economic Survival, points out that other cities in the region, like Bell Gardens and Pomona, have recently capped annual rent increases at 4%.
“This 7% increase is going to add to displacement, to homelessness, to more tenant hardship,” said Gross, “thus adding to the existing affordable housing crisis.”
In Pico-Union, renter Betty Rivera pays about $1,300 a month for a cramped one-bedroom that she shares with her sister. The rent already eats up most of her income, she says, and even an increase of roughly $90 or $100 a month would put her over a financial cliff.
“It would be way too much,” she said in Spanish, through a translator. “There will not be enough money for food. I wouldn’t even be able to pay the rent.”
On the flipside of the equation, landlords have also been impacted by the skyrocketing cost of living. According to city officials, during the rent freeze, trash-hauling fees in the city increased 14%, water rates went up 39%, electricity 10%, and insurance costs 40%, not to mention higher property taxes, labor and material costs.
“We have some properties that are negative cash-flowing,” says Dan Tenenbaum, owner of Pacific Crest Real Estate, which owns about a dozen buildings in and around LA. Dealing with increasing costs without the ability to raise rents makes it hard to keep up with maintenance, repairs and basic services, he says.
“Our current economic system relies on private apartment owners to provide housing,” says Tenenbaum. “If we had a different economic system, and the government was in the business of doing that, we'd be having a different discussion. But because they rely on the private, they have to provide some form of reasonable return.”
How we got here
The city’s Rent Stabilization Ordinance applies to apartments built on or before October 1, 1978, which accounts for almost 70% of the city’s multifamily units. For those units, allowable annual increases (during regular, non-pandemic times) are based on the Consumer Price Index, up to a maximum of 8%.
In March 2020, the City of LA adopted a number of tenant protections to avoid people losing housing or facing eviction due to COVID-19, including a freeze on annual increases for existing tenants in RSO units. That expires February 1, and based on the CPI formula the 2024 allowable increase comes to 7%, with an additional 1% allowed for gas and electricity if those are included in the rent.
What’s next?
Last week LA City Councilmembers Bob Blumenfield and Hugo Soto-Martinez introduced a motion asking LA’s Housing Department to study the formula that determines the annual allowable rent increase for RSO units, with an eye towards possibly changing it.
Then Soto-Martinez introduced another motion to extend the rent freeze for an additional six months, in order to allow time for that study to be completed. According to his spokesman, the City Council’s Housing and Homelessness Committee is likely to hear the motion calling for a delay next week, and if approved there it’ll move on to the full council for a vote.
