Los Angeles will implement new rent-control limits in February, capping annual increases at 1% to 4% for most multifamily apartments, The Wall Street Journal reported on Tuesday.
That is down from a 3% to 8% limit dating back 40 years.
Landlords and developers opposed the changes, saying they would make it more difficult to keep up with rising costs and attract new investment.
But activist groups and Los Angeles's political leaders wanted stricter rent limits in an attempt to prevent evictions and homelessness.
"The problem facing the nation and most certainly facing our state and city is affordability, and at the core of affordability is the price of housing," Mayor Karen Bass, a Democrat, said at a news conference last week, after signing the new ordinance. "This is a step forward."
The region's long-running housing shortage was made even worse by multiple wildfires last year that destroyed neighborhoods in the Los Angeles area, The Wall Street Journal reported.
The city's new rules don't apply to any single-family homes or to apartments built after the late 1970s, when an earlier version of rent limits first took effect. In addition, landlords can still boost rents to market rates when new tenants move in.
But this leaves roughly three-fourths of Los Angeles's multifamily housing stock (some 651,000 apartments) set to face stricter caps on rent increases.
The average rent for a rent-controlled unit in Los Angeles is about $1,800 a month, while market-rate units go for about $2,700. Both are higher than the national average of about $1,750, which includes rent-regulated and market-rate apartments.
Economists have long argued that rent controls deter investment and, over the long run, lead to chronic undersupply.
But as voters are increasingly frustrated over stubbornly high housing costs, more politicians are favoring rent regulation.
Investors had already been avoiding the Los Angeles housing market due to what they see as a harsher regulatory environment, said Greg Harris, a multifamily investment broker with Institutional Property Advisors.
Apartment owners, especially small ones, said they have been severely harmed by the rising interest rates, inflation, and insurance costs of the past several years.
Brian Freeman ✉
Brian Freeman, a Newsmax writer based in Israel, has more than three decades writing and editing about culture and politics for newspapers, online and television.
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