L.A. RSO Formula Change: We Address the 1% Adders for Utilities
L.A. RSO Formula Change: We Address the 1% Adders for Utilities
Many of our members have asked about the status of the 1% additional increase when gas and/or electricity is paid for by landlords on behalf of their tenants.
We have been advised that for 31 days from the date the new ordinance was
(1) passed by the City Council AND then
(2) signed by the mayor AND
(3) officially published by the City of Los Angeles (all 3 are required to start the “clock” on the 31st day), eligible owners can notice tenants for an additional 1% increase for each utility paid.
MEMBERS ARE STRONGLY URGED TO SEEK ADVICE FROM LEGAL APPROPRIATE LEGAL COUNSEL regarding their specific situation. Noticing tenants for a change in terms that includes the additional 1% for utilities applies only to owners who have an increase available to them during the 31-day period following all three steps set forth above.
Unfortunately, at this time, we do not know when the 31-day period begins or ends. We are attempting to determine whether the mayor signed the ordinance and, if so, when, and whether the ordinance has officially been published by the City of Los Angeles. The ordinance was passed by the Los Angeles City Council on Friday, December 12, 2025, so the 31-day period will end on or after January 12, 2026.
As previously reported, the following are the key provisions of the new ordinance:
- The allowable annual maximum rent increase is 3% for the period from June 1, 2025, through June 30, 2026, for increases not previously noticed and served upon tenants.
- Starting July 1, 2026, the annual allowable rent increase will be calculated based on 90% of the Consumer Price Index (CPI) for “All Items” (down from the current 100% of CPI).
- Maximum allowed increase (a/k/a, “ceiling”) will be reduced to 4% (down from the existing 8%), and the minimum allowable increase (a/k/a, “floor”) will be reduced to 1% (down from the existing 3%).
- Following 31 days after (1) passage of ordnance, (2) signature by mayor, and (3) official City publication, elimination of the additional 1% increase previously permitted for housing providers who pay for gas and/or electricity on behalf of renters living in master metered properties.
- Following 31 days after (1) passage of the ordinance, (2) signature by the mayor, and (3) official City publication, the elimination of the existing 10% increase previously permitted for additional occupants who are deemed dependents of the existing renter.
- Starting July 1, 2026, relocation fee amounts will increase each year according to the new RSO formula, but will be based on 100% of CPI.
A Word of Caution: Housing providers need to weigh the benefits of increasing the rent by the additional 1% adders during this small window of 31 days versus the risk of potentially standing in front of activist judges who may believe otherwise. Some on the City Council and tenants’ rights groups have already been notifying constituents that the 1% adders have ended, effective with the December 12, 2025, City Council vote. Again, we urge you to seek legal advice and to proceed with caution.
IMPORTANT UPDATE: WE HAVE LEARNED THAT THE ORDINANCE WAS SIGNED BY MAYOR BASS ON DECEMBER 23, 2025, AND THE ORDINANCE WAS OFFICIALLY POSTED THE FOLLOWING DAY ON DECEMBER 24TH. The final, signed ordinance is set forth below. Accordingly, the new ordinance officially becomes effective 31 days after December 24, 2025.
A copy of the new ordinance is attached here: Updated PDF