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Los Angeles Annual Allowable Rent Increase

Multi-family property built before 1978 in the City of Los Angeles falls under Los Angeles rent stabilization ordinance (RSO) otherwise known as rent control. Rent control limits the amount you can raise rents and the reasons you can remove a tenant (LINK 12 legal reason for eviction).

Historically, the annual rent increase average is 3% this year it is 4%, which is nice for landlords. The minimum rent increase is 3% the maximum rent increase is 8%.

LAHD wrote a great guide file:///C:/Users/James%20Campbell/Downloads/allowable_rent_increases_english.pdf


If your building has a gross rent Multiplier of 12, and you are giving your tenant a $100 break on rent:

12 GRM x ($100 below market rent/mo. x 12 months) = $14,400

You lose $14,400. Staggering that doing a small a favor as saving them $100 a month on their rent isn’t costing you the $1,200 of lost rent upfront- but could be costing you $14,400 when you decide to sell. In this situation, I always recommend that you continue serving your below market tenants rent increase notices each year, but let them know you have no intention on enforcing it- that way you can keep as high a monthly gross as possible on your rents and keep up with RSO. Remember, if you don’t exercise the right to do a rent increase in a given year- you lose it.

as a result landlords who do not keep up with annual increases will end up with below market tenants in their building that dramatically lower their property’s sale value.If you have trouble raising rents as a landlord, hire a property management company to do it for you.

Example Rent Increase Form:

How do I raise the Rent?

By State law Civil Code Section 827(b) You need to give tenants 30 days notice prior to raising the rent. For Rent increases larger than 10% – 60 days notice is required.

There is no special form that you need to use for a rent increase. You can just write your tenant a letter and mail it to them and post it on their door.

If you are making your own form, You will want to say:

1. When the rent increase goes in effect.

2. How much is the increase and the new rent amount.

3. You should date it so you can show you gave adequate notice

If you don’t want to make your own form, Apartment Owners Association (AOA) realtors, and googling can provide you a standardized forms. Here is a generic form for California:

You do NOT need LAHD approval to raise rents that are the annual allowable increase.

The annual increase may be imposed only if twelve (12) months or more have passed since the last such rent increase. Landlords are required to serve tenants with a written 30-day notice before the increase may be collected

Decontrol of Rents – Raise Rent to Market

If a unit is:

  • voluntarily vacated (including “Cash for Keys”
  • (Legal Reason #1) tenant evicted for non-payment of rent.
  • (Legal Reason #2) tenant evicted for violating the terms of the rental agreement.
  • (Legal reason #3) Tenant evicted for being a public nuisance
  • (Legal Reason #4) Tenant evicted for using the rental for illegal purposes.
  • (Legal Reason #5) Tenant refuses to sign a lease with similar terms
  • (Legal Reason #6) Tenant refused landlord access
  • (Legal Reason #7) Unauthorized subtenant

The rent may be adjusted to market levels.

If the unit is:

  • (Legal Reason #8) Owner Occupancy Eviction
  • (Legal Reason #9) Renovation Work
  • (Legal Reason #10) Remove permanently from the rental market – Ellis Act

Then if the unit is rented again it does not automatically go back to Market.

Pass on Charges

The Landlord may pass on 100% of the Annual SCEP Fee 3.61/mo. to the tenant.

The landlord may pass on 50% of the rental registration of $38.75/per unit.

Los Angeles Historic Rent Increase Amounts 

 [visualizer id=”37006″] 


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