Last week, I was talking with another apartment owner about rent hikes for 2025, and I was surprised to learn that even experienced investors are unclear on what’s allowed in Los Angeles City versus Los Angeles County. So, I’ve broken it down below to help clear up any confusion and give you the info you need to plan for next year with confidence.

Rent Increase Limits

If you remember nothing else from this, remember this key point:

• LA City: For rental units covered by the City of LA's Rent Stabilization Ordinance (RSO), rent increases from July 1, 2024, to June 30, 2025, are capped at 4%. If the landlord provides gas and electricity to the tenant, they can add another 1% to the increase. Source: Los Angeles Housing Department

• LA County: In 2025, for rent-controlled units, rent increases will be limited to 60% of the annual change in the consumer price index (CPI) — which tracks overall cost increases in the economy. However, the maximum increase allowed is 3%. Source: Los Angeles County Consumer & Business Affairs

Exceptions:

• Small Property Owners: Landlords with 10 or fewer units (including outside LA County) can increase rents by up to 4%.
• Luxury Units: Units with 2 bedrooms or fewer that were rented for at least $4,000/month in September 2018 can increase rents by up to 5%.

Multifamily Market Update: Slower Sales and What It Means

In Q3 2024, sales of multifamily properties in LA totaled $1.6 billion, up from $1.2 billion in Q2, but still way below the 10-year average of $2.2 billion per quarter.

Why is this happening?

• High Borrowing Costs: With interest rates between 6-7%, financing is tougher for buyers.
• Stricter Lending Rules: Banks are approving fewer loans, so fewer deals are getting done.
• Regulatory Uncertainty: Rent control and other regulations are making some investors hesitant to buy in LA.

Where is the action? Well-capitalized buyers are focusing on high-quality properties, especially in areas with limited supply and strong demand, like Brentwood, Santa Monica, and Venice. The slower market means there’s less competition for investors with solid funding. If you’re looking to buy, let’s chat and see if we can find a deal that fits your goals.

Private Buyers Leading the Way in LA Multifamily Market

Over the past year, private buyers have taken the lead in LA’s multifamily market, accounting for 75% of sales — up from their usual 66%.

Why is this happening?

• Big Investors Are Pulling Back: Higher interest rates and pressure from investors are pushing large institutions to buy less or sell off properties.
• Private Buyers Want Stability: Local investors are okay with lower returns if they see the property as a safe, long-term investment.
• They’re More Flexible: Private buyers are open to all kinds of deals, whether it’s fully rented, stable properties or buildings that need work.

What are private buyers looking for? They’re focusing on areas like West LA, Silver Lake, and South Bay, where there’s strong demand and limited supply. These neighborhoods tend to offer steady rents, reliable tenants, and long-term growth.

Even if selling hasn’t crossed your mind lately, it’s always a good idea to know your property’s value, especially if it’s in one of these high-demand areas.

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