Changes to the City of Los Angeles Rent Stabilization Ordinance
On December 23, 2025, Mayor Karen Bass approved an ordinance which will amend several provisions of the Rent Stabilization Ordinance. The city intends to be even more restrictive towards issuing rent increases and restricting passthrough costs in the name of protecting families from having to “choose between buying groceries or paying the rent, or live in fear of eviction because they welcomed a child into their family.” Property owners of RSO protected units must now prepare for tighter margins in 2026 and beyond, as the city moves to eliminate rent adjustments tied to new dependents, revise the annual rent increase formula, and phase out certain utility surcharges.
Effective January 24, 2026, Landlords can no longer charge the existing 10% increase that was permitted for additional occupants who are deemed dependents of the existing renter. This change, framed by the city as a protection for growing families, removes yet another longstanding mechanism for modest rent adjustments. Senior Associate Attorney, Alice Sandoval, commented: “While protecting families and vulnerable populations is an important policy goal, the ordinance goes too far by eliminating reasonable rent adjustments without providing clear standards or safeguards for property owners.”
Effective July 1, 2026, the allowable rent increase will now be calculated based on 90% of the Consumer Price Index (CPI) for “All Items,” which is a change from the previous 100% CPI calculation. Landlords will no longer be able to match rent increases with the full pace of inflation. The maximum allowed rental increase will be reduced from 8% to 4% and the minimum allowed rental increase will be reduced from 3% to 1%. This change will put Landlords in a vulnerable position in the event that other costs such as insurance or HOA fees rise. These changes lead to long term financial pressure that can compound over time and widen the gap between market rates and allowed RSO rents and will also cut into operating margins over time as there is less flexibility to offset certain costs through rent adjustments.
Also effective on July 1, 2026, relocation fee amounts will increase each year according to the RSO formula but will be based on 100% of the CPI instead. This change will lead to higher relocation costs for no-fault evictions based upon actions like owner-occupancy or Elis Act withdrawal. Again, tying these costs to the CPI will lead to compounding financial pressure, especially during periods of high inflation.
Effective January 24, 2026, Landlords who pay for utilities will no longer be able to charge an additional 1% rent increase for each gas and/or electricity. There are no adjustments to this provision, just a blatant elimination of a long-standing cost recovery mechanism. For landlords, this represents a direct financial hit, particularly those operating older buildings or multi-unit properties where utility costs can be substantial and fluctuate dramatically with seasonal usage or rate increases. In an environment where rent increases are already capped and operating expenses continue to rise, this change removes yet another tool landlords had to maintain balance between income and overhead. Unfortunately, the ordinance offers no replacement mechanism or alternative form of cost-sharing, further tightening the already narrow margins property owners must manage.
Navigating these new laws can be overwhelming, especially as City Hall continues to push forward with new policies that are fundamentally changing how landlords should manage their property. In this changing landscape, proactive legal guidance isn’t just a suggestion, it’s quickly becoming a necessity. Don’t face these challenges alone, contact Kendall Law today to schedule a consultation to ensure you are properly prepared.
