Los Angeles strengthened its rent stabilization law for the first time in 40 years Wednesday, setting a 4% ceiling on annual rent increases for a massive portion of the city’s housing stock.

The historic vote by the L.A. City Council will help set rents for decades to come for tenants who live in units built before 1978 — nearly half of the city’s residents.

Two council members voted against the new rules, arguing that they would tip the scale against landlords and could chill development. The measure’s backers said the changes were necessary for tenants struggling to make rent every month.

“The city has not done enough to protect renters,” said Councilmember Nithya Raman, who wrote the proposal. “What we have right now is an opportunity to make L.A. more affordable, because when people can afford to stay in Los Angeles, this entire city thrives.”

The vote came as L.A. and many parts of the country are struggling with a housing affordability crisis, and after democratic socialist Zohran Mamdani won the New York City mayor’s election on a pledge to “freeze the rent.”

Most Angelenos are renters, and more than half are rent-burdened, meaning they spend more than 30% of their income on rent, according to the city’s Housing Department. One in 10 Angelenos pays 90% of their income toward rent.

The maximum annual rent increase for rent-stabilized apartments will now be 1% to 4%, depending on inflation. That’s down from current caps of 3% to 8% and as much as 10% if the landlord pays for utilities.

“This sets the message: Do not build here. Do not invest in Los Angeles. Do not keep your units on the market,” said Councilmember John Lee, who voted against the new cap with Councilmember Bob Blumenfield.

In the months leading up to the vote, dozens of tenants and landlords pleaded their cases before the City Council’s Housing and Homelessness Committee.

Valerie Valentine, who bought a triplex in South Los Angeles two weeks ago, spoke of bills that were already accumulating. She feared that she wouldn’t collect enough in rent to offset those expenses.

“It’s draconian,” she said in an interview. “Lowering the amount we can raise rent is a slap in the face. They are favoring one side of the aisle more than the other.”

On the other side, renters, who far outnumber landlords in the city, supported an even stronger 3% cap proposed by Raman.

Cindy Moran, 31, has lived in a rent-stabilized one-bedroom apartment in Exposition Park with her parents since she was born. They are now fighting eviction, and she fears that they will not be able to find another apartment as affordable as the $700 a month they pay. She believes her landlord is trying to turn the site into 120 units of affordable housing.

“I meet people every day who pay $2,000 for a one bedroom. They can’t afford a 10% increase,” Moran said in an interview. “We need to think about the most vulnerable right now.”

A majority of California cities with rent-stabilized apartments set a ceiling of between 3% and 5%, according to the city’s Housing Department.

Last week, the council’s Housing and Homelessness Committee narrowly passed Raman’s initial proposal, which would have set the maximum annual rent increase at 3%, or 60% of the consumer price index, whichever is lower.

The floor on rent increases would have been 0%. In years where there was no inflation, landlords would not have been able to raise the rent at all.

On Wednesday, council members proposed a flurry of last-minute amendments, raising the ceiling to 4%, or 90% of the consumer price index, whichever is lower. The floor was raised to 1%.

Councilmember Eunisses Hernandez, who voted for the 4% rent cap, cited an “eviction to homelessness pipeline” and said she was trying to even the playing field between renters and landlords.

“We have had a losing group for a long time, and it is tenants,” she said.

On top of making it harder for small landlords to turn a profit, some fear that the change could slow development in a city that desperately needs more housing.

In L.A., a new building constructed on the site of one that was rent-stabilized is subject to the rent stabilization ordinance, unless 20% of the new units are affordable for lower-income households.

A lower cap on rent increases may cause developers to forgo building on those lots, said Zachary Pitts, the Los Angeles director of YIMBY Action, which advocates for more affordable housing.

“Such unintended consequences could undermine the City’s housing goals at a time when increasing supply is critical to affordability and homelessness prevention,” he said in a statement Monday.

Raman said she “will work to ensure new production is not impacted by these changes.”

“Only increased supply can help reduce costs for everyone in this city,” she said in a statement Tuesday.

Some say that lowering the allowable rent increase also could have a downside for tenants, as falling revenues could lead landlords to spend less on maintaining their buildings.

“Certain small mom and pop owners just won’t have that kind of money,” said Paul Jesman, a real estate agent and landlord. “They’re going to push this roof replacement to next year because they don’t have the money for it.”

Landlords also may be more motivated to evict long-term tenants who fall behind on payments, so they can charge market rates to new tenants, said Shane Phillips, housing initiative manager at UCLA’s Lewis Center for Regional Policy Studies.

City law allows landlords to charge market rates to a new tenant, though the cap on increases kicks in for the tenant after that.

Just before Wednesday’s vote, Raman told her colleagues that they needed to take action immediately.

“We do need to make a change to this formula ... It has been 40 years,” she said. “People face extraordinary rent increases year after year ... driving people out of the city.”

©2025 Los Angeles Times. Visit at latimes.com. Distributed by Tribune Content Agency, LLC.