The biggest change for Los Angeles apartment owners in 2026 is a new formula for annual increases on rent-stabilized units: 90% of inflation, with a 1% floor and a 4% ceiling, in place of the old 3% to 8% range. The city also ended the extra percentage owners of master-metered buildings could add for utilities. Here is how those changes fit into the wider set of rules that govern rental housing in the city.
Which buildings fall under the RSO
The City of Los Angeles Rent Stabilization Ordinance, administered by the Los Angeles Housing Department (LAHD), applies to rental units in properties first built on or before October 1, 1978, along with certain replacement units, according to the LAHD RSO overview. In practice, that covers a large share of the city’s older courtyard buildings, garden apartments and small walk-ups.
Buildings that are not under the RSO are not rule-free. Most of them fall under the city’s Just Cause Ordinance and, depending on age, California’s statewide rent cap, both covered below. The first question for any owner or buyer is therefore which regime applies to each unit, and that starts with the building’s original certificate of occupancy date.
The new annual increase formula
The City Council approved the formula change on December 12, 2025, as reported by the Apartment Association of Greater Los Angeles. The key terms:
- Basis: 90% of the Consumer Price Index, down from 100%.
- Floor: 1%, down from 3%.
- Ceiling: 4%, down from 8%.
- Start date: the new formula governs increases beginning July 1, 2026.
LAHD’s allowable rent increase bulletin lists the permitted increase for July 1, 2026 through June 30, 2027 as 3%, within the 1% to 4% range, and notes that the calculation uses CPI averages for the 12 months ending September 30. RSO increases can be taken only once every 12 months.
For owners, the main effect is on the upside in high-inflation years. Under the old rules, a spike in CPI could translate into an increase of up to 8%; under the new rules, the most an RSO unit can rise in a single year is 4%.
The end of the utility add-on
For years, RSO owners who paid gas or electricity for tenants could add an extra percentage on top of the base increase. That option is gone. LAHD’s bulletin states that, effective February 2, 2026, the RSO annual increase must not include any additional percentage for utilities. AAGLA’s summary adds that the ordinance also removed the 10% increase previously allowed for additional occupants deemed dependents.
This matters most for older master-metered buildings, which are common in the RSO stock. Owners still pay those utility bills, but they can no longer recover rising costs through a separate add-on, so utility expense now competes directly with the base increase in the budget.
Protections that reach beyond RSO units
Several city and state rules apply whether or not a unit is rent-stabilized. The LAHD renter protections page lists the main ones:
- Just Cause Ordinance (JCO): effective January 27, 2023, it covers most rental units in the city that are not under the RSO, including many single-family homes and condominiums. Protections start once a tenant has lived in a unit for six months or the original lease has expired, whichever comes first, and no-fault terminations require relocation assistance.
- Nonpayment threshold: since March 27, 2023, a landlord cannot pursue eviction for nonpayment unless the amount owed exceeds the Fair Market Rent for that unit’s bedroom size.
- Tenant Anti-Harassment Ordinance: adopted in 2021, it applies to all residential units in the city and prohibits conduct such as removing housing services or withholding repairs.
- JCO registration: LAHD bills an annual registration of $31.05 per unit for JCO-covered properties.
At the state level, the Tenant Protection Act of 2019 (AB 1482) limits annual increases for many non-RSO units to 5% plus inflation, capped at 10%, and generally exempts housing that received its certificate of occupancy within the prior 15 years. In Los Angeles, a post-1978 building can therefore be outside the RSO but still subject to the state cap, while newer construction may be outside both.
How the rules shape building operations
The combined effect is a rental market where the unit-by-unit legal status drives the numbers. A practical checklist for owners:
- Map every unit to its regime: RSO, JCO plus state cap, or JCO only.
- Recalculate your income budget using the 1% to 4% range rather than historical RSO increases.
- Review master-metered utility costs now that the add-on is no longer available; submetering or conservation work may deserve a fresh look.
- Keep registration current and records clean, since LAHD compliance is part of any buyer’s due diligence.
What owners should take from this
Rent regulation in Los Angeles is layered, and the 2026 changes tighten the RSO layer most. Owners who hold older buildings for the long term will want income projections built on the new ceiling, while owners considering a sale should expect buyers to underwrite the same way. Our guide to selling rental property with tenants in place covers how occupied buildings typically change hands.
For local pricing and demand context, visit our Los Angeles market page, or compare other California multifamily markets.
