REAL ESTATE NEWS

The City of Los Angeles is tightening rent controls for the first time in 40 years, a dramatic departure from the strategy followed by other California municipalities.

Los Angeles will implement new rent-control limits in February, capping annual increases at 1% to 4% for most multifamily apartments.

The new Los Angeles policy affects approximately 651,000 units or three-fourths of L.A.?s multifamily housing stock. Starting in early February, landlords on most apartments can only raise rents between 1% and 4% a year, depending on the local inflation rate.

That is down from the 3% to 8% limit that has been in place for 40 years. Los Angeles is wading deeper into a national debate over whether price controls can help tenants struggling to afford their homes or if they will depress new investment.

However, different approaches will be attempted due to the state legislature and Governor Gavin Newsom?s approval of SB 79 in October. It requires a handful of counties, including L.A. County, to allow buildings of up to nine stories tall in areas near major transit stops.

This change overrides local zoning laws in those areas. It was one of the most significant legislative milestones yet for supporters of upzoning, but it faced major hurdles before it was signed into law. The problem facing the nation is affordability, and at its core is the price of housing.

Northern California is intensely tech-driven, anchored by AI, data centers and laboratory real estate. Its strategies center on adaptive reuse, sustainability and multifamily additions.

Southern California leans heavily into industrial logistics, retail resilience and affordable/residential integration, while grappling with operational inflation and evolving regulatory regimes.

These regional distinctions will shape distinct investment focuses and development trajectories in 2026.

?LA City Council is sending a clear message to the development community: the city is no longer a stable place to build. When you force rent increases below the cost of operations, you stifle new investment and push capital to other cities,? Avi Sinai, Esq., founder of Los Angeles-based Sinai Law Firm, told GlobeSt.com.

This policy is also a direct hit to state-level progress like SB 79, Sinai said.

?Contrary to what is often reported, new buildings in LA can be subject to rent control if they replace existing rent-controlled units,? he said.

?The city is effectively sabotaging its own goals for transit-oriented density and growth.?

Source: GlobeSt/ALM