L.A. County's New Rent Increase Formula: What You Need to Know
L.A. County's New Rent Increase Formula: What You Need to Know
On June 4th, the Los Angeles County Supervisors voted 3-to-2 (Barger and Hahn dissenting) to request staff to draft an ordinance that will modify the current allowable rent increase formula effective on January 1, 2025. The proposed change applies only to rental units subject to the County’s Rent Stabilization Ordinance (unincorporated areas of Los Angeles County).
The change is not yet final and is subject to drafting of and voting by the Supervisors to approve a final ordinance. Again, the June 4th vote merely directed staff to draft an ordinance that would amend the County’s rent stabilization ordinance as follows:
- Current Allowed Rent Increase: 4% Per Year Through June 30, 2024
- Rent Increase Rest of 2024: 4% Per Year from July 1, 2024, Through December 31, 2024 (If the board had not acted, a new 4.275% allowable increase would have taken effect on July 1st.) The 4% allowable increase through the end of 2024 was approved and finalized by the Board of Supervisors.
- Rent Increase to be Allowed for 2025: In general, the annual allowable rent increase is to be 60% of the Consumer Price Index (CPI) up to a maximum of 3%, with an allowance for an addition 1% for small owners or an allowance for an additional 2% for luxury units. This changes is subject to a final ordinance being drafted and final vote by the Board of Supervisors. See the example in the chart below:
(1)- The “Maximum Allowed Increase” would be relevant only if the CPI were to exceed 5%. For example, if CPI were 6%, then 60% of 6% would be 3.6%, however, the maximum allowable rent increase in this situation would only be 3%. In addition, there is “no floor” and in the event CPI were to be zero or less than zero, property owners would not be entitled to an increase for that year.
(2)- A “Luxury Unit” means any rental unit subject to the County’s rent stabilization ordinance that (i) has two (2) or less bedrooms, (ii) is located within a single structure that contains at least twenty-five (25) or more units, and (iii) as of September 11, 2018, the property owner received at least four thousand dollars ($4,000) per month in rent.
(3)- A “Small Owner” generally owns no more than ten (10) rental units and no more than three (3) properties, but subject to final ordinance language.