Short version: your allowable rent increase is still 3%. It's 3% through June 30, 2027.
If you spent the first half of this year worried that when July 1st came, your income would get cut — that deadline came, it went, and the number on your rent increase notice didn't move.
I've been reading the same headlines you have. So let's separate what actually happened from what got marketed, because the difference matters when you're deciding whether to hold your LA multifamily property or sell it.
What the number actually is right now
The annual rent increase for units subject to the City of Los Angeles Rent Stabilization Ordinance, effective July 1, 2026 through June 30, 2027, is 3%. (This is straight from the Los Angeles Housing Department.)
Not 2.8%. Not 1%. Three percent — the same as last year, and the year before that.
Here's what that looks like in real dollars. On a unit renting at $1,800 a month, 3% is $54. New rent, $1,854. On a $2,400 unit, it's $72. That's your year.
And you can only take it once every twelve months. State law requires 30 days' written notice for any increase under 10%.
So what did change?
Two things changed.
One: the formula underneath the number got rewritten. The City Council voted 12–2 on December 12, 2025 to amend the RSO increase formula (Council Members John Lee and Monica Rodriguez were the two no votes). The new formula sets the allowable increase at 90% of the average Consumer Price Index instead of 100%, and it narrows the band to a 1% floor and a 4% ceiling.
So, in plain English: the old rules said your increase could never go below 3% and never above 8%. The new rules say it can drop as low as 1% and can never exceed 4%.
That's the maximum every year from now on, even if inflation goes much higher than 4%.
Two: the add-ons are gone. If you pay gas or electric for your tenants, you used to be able to tack on an extra 1% per utility. That's repealed, effective February 2, 2026. So is the 10% increase you could take when an additional dependent moved into a unit.
If your last increase notice included a utility adder, stop reusing that math. Any notice served on or after February 2, 2026 can only carry the base allowable percentage.
One note on timing, because the sources genuinely conflict: LAHD's own page describes the amended formula as effective February 2, 2026, while the Apartment Association of Greater Los Angeles describes the new formula calculation as being implemented July 1, 2026. Both agree on the substance — 90% of CPI, 1% floor, 4% ceiling. If you're working out a specific notice date, confirm it with LAHD for your property.
The part nobody put in the headline
I received a lot of broker emails saying "sell before July 1." Almost nobody wrote the follow-up.
Here's the thing: the reason there was no cliff on July 1 is that LAHD held the allowable increase at 3% through June 2027. The formula changed; the published rate didn't. Those are two different levers, and the marketing collapsed them into one.
But don't confuse "no cliff" with "no damage." The damage is structural and it shows up on a longer horizon.
Think about what an 8% ceiling was actually worth to you. It was optionality. In a high-inflation year, you could keep up. Your building's value was partly built on the possibility that a bad year for the dollar could be a decent year for your rent roll. That option is now worth zero above 4%.
Buyers like us price optionality. When you take away the top half of a rent-growth range, you're not changing this year's NOI — you're changing every projection built on top of it.
What this does to your LA multifamily's value
Los Angeles multifamily value is driven by income and a cap rate. Your building isn't worth more because the kitchens are nice; it's worth more because a buyer believes the income line can go up.
So a buyer underwriting a pre-1978 LA building in 2024 could model rent growth against a range topping out at 8%. That same buyer today models against a hard 4% cap. Same rent roll, same tenants, same address, just a smaller revenue number at the end of the projection.
Two specific places this bites hardest:
Loss-to-lease recovery just got slower. If you have long-term tenants paying well under market, and if you've owned the property for a long time, the gap between their rent and market rent is your upside. It's also a buyer's upside, which is why they'll pay for it. But the rate at which anyone can close that gap through annual increases is now capped at 4%, permanently.
Your expense line has no cap at all. Insurance, labor, materials, water, compliance — none of it is capped at 4%. LAHD sets your revenue ceiling. Nobody sets your cost ceiling. In any year where your operating costs outrun 3%, you are generating less net revenue than you were the year before.
That's the squeeze. It's not dramatic in any single year, but it's brutal over ten years or more.
Where the rest of the rules landed
A few things worth knowing that sit next to this:
Relocation fee amounts increase annually under the new formula starting July 1, 2026, but those are calculated on 100% of CPI, not 90%. If your building is in the City of LA and was built before October 1, 1978 with two or more units, you're almost certainly RSO. Check it yourself at zimas.lacity.org.
If you're not RSO, you're likely under AB 1482, the state law. For the period August 1, 2025 through July 31, 2026, the maximum allowable increase in the LA area is 8%, down from 8.9% the year before. Different rules, different math — and if your building sits outside City of LA boundaries (Beverly Hills, Santa Monica, West Hollywood, Culver City, Inglewood, Long Beach), you're under that city's rent control ordinance, not this one. Some are better and some are worse.
So should you sell your LA multifamily?
If your rents are close to market, your building is in decent shape, your loan is fixed and cheap, and management isn't eating your weekends — generally you can hold it. Rent control caps your upside; it doesn't destroy the asset. Los Angeles is still one of the hardest places in the country to build new supply, and that scarcity is not going anywhere.
But if you have low rents and significant maintenance you don't want to fund, the math got worse and it's not getting better.
What we do
We buy apartment buildings across Los Angeles County. Four to a hundred-plus units. We're a principal buyer — we're not listing your building and there's no commission.
If you want a straight number on your building, send the address, unit mix, and rent roll. You'll get real pricing feedback and a real offer — not a pitch deck, not a listing presentation. If the number works, we'll talk. If it doesn't, you've got a data point and you owe us nothing.
The Beverly Group
139 S. Beverly Drive, Beverly Hills, CA 90212
(310) 620-2290 · LA@BeverlyGroup.com
FAQs
What is the LA RSO rent increase for July 2026 to June 2027?
3%. LAHD has set the annual allowable increase at 3% for RSO units for the period July 1, 2026 through June 30, 2027.
Didn't the RSO increase drop on July 1, 2026?
The formula changed, but the published rate did not. The new formula calculates the increase at 90% of average CPI with a 1% floor and a 4% ceiling. LAHD held the actual allowable increase at 3% through June 2027.
Can I still add 1% for gas and 1% for electric?
No. The utility add-ons were repealed effective February 2, 2026. So was the 10% additional-dependent increase. Any notice served on or after that date may only include the base allowable percentage.
What was the old RSO formula?
100% of CPI with a 3% floor and an 8% ceiling. The new formula is 90% of CPI with a 1% floor and a 4% ceiling.
How do I know if my building is RSO?
Go to zimas.lacity.org, enter your address, and check the Housing tab. Generally, City of LA buildings with two or more units built before October 1, 1978 are covered.
Does this affect relocation fees?
Yes — relocation fee amounts increase annually under the new formula starting July 1, 2026, but they're calculated on 100% of CPI rather than 90%.
Does a rent-controlled building sell for less?
It sells at a different cap rate, not at no price. There is an active, specific buyer pool for RSO product in Los Angeles, and buildings with a large gap between in-place and market rents are frequently the ones buyers want most.
Sources: Los Angeles Housing Department (housing.lacity.gov, Renter Protections and RSO Rent Increase Calculator pages); Apartment Association of Greater Los Angeles reporting on the December 12, 2025 City Council vote and the amended RSO formula.
Disclaimer
This article is general information about the Los Angeles Rent Stabilization Ordinance and related rent rules as of July 2026. It is not legal, tax, or financial advice, and it is not a substitute for guidance from a qualified attorney or advisor. Rent-control rules — including the allowable annual increase percentage, the effective dates, and how they apply — change over time and depend on your specific property, your tenancy, and the exact timing of your notice. Sources sometimes conflict, and the officially published rate is what governs. Before you serve any rent increase notice, or make a decision to hold or sell based on anything here, confirm the current rules for your property directly with the Los Angeles Housing Department and your own attorney. The Beverly Group is a principal buyer of apartment buildings, not a law firm, and does not provide legal advice.
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