You’re already dealing with rising insurance, higher interest rates, and unpredictable maintenance costs. And now, the City of Los Angeles is moving to slash the rent increases you rely on to cover those expenses.

We understand how frustrating and overwhelming this feels. At Lucrum Real Estate Group, we’ve guided countless Los Angeles apartment owners through shifting regulations, economic downturns, and policy battles. We know what it takes to protect income and preserve portfolio value—even in uncertain times.

This isn’t just policy.
It’s your business model on the line.

What’s Changing—And Why It Matters

On October 1, 2025, the Housing and Homelessness Committee will vote on reductions that could cut your allowable rent increases by up to 27%.

Here’s what’s being proposed:

• CPI minus Shelter → Rent increases would no longer track 100% of CPI. Removing “Shelter” lowers the formula by 27%.
• New Floor → Minimum increase drops from 3% to 2%.
• New Ceiling → Maximum increase slashed from 8% to 5%.
• Utility Offsets Eliminated → +1% for electricity and +1% for gas in master-metered buildings are gone.

The Flawed LAHD Report Behind the Proposal

These changes are based on a Los Angeles Housing Department (LAHD) report that:

• Excludes mortgage payments, which account for more than 50% of operating costs.
• Recommends removing the Shelter component from CPI — the only piece reflecting the true cost of providing housing.

Tenant Activists Want to Go Even Further

Groups like the Democratic Socialists of America (DSA) are pushing for:

• A hard 3% cap on annual increases.
• Elimination of the floor entirely — leaving room for 0% increases.

If adopted, you’d have no ability to keep up with inflation, address emergencies, or plan for the future.

Lucrum’s Strategic Guidance: Be Proactive, Not Reactive

At Lucrum, we help apartment owners and multifamily investors like you protect income, build smarter portfolios, and navigate policy uncertainty.

Here’s how we can guide you forward:

• Valuation & Advisory Services: Model how rent caps affect NOI, cap rate, and asset value—so you can plan with clarity.
• Capital Markets & Liquidity Solutions: Refinance strategies and repositioning options, including Lucrum’s Rapid Offer for accelerated exits.
• 1031 Exchange Support: Transition into more favorable markets or asset types while deferring capital gains.
• Portfolio Stress Testing: Identify which assets are at the highest risk — and which present opportunities in a changing landscape.

We’ve helped owners preserve and grow portfolios through every cycle — and we can help you do the same.

What You Need to Do Right Now

Time is short. Here’s how to respond before October 1:

• Attend the Hearing
  Date: October 1, 2025
  Time: 2:30 PM
  Location: Los Angeles City Hall
  Committee: Housing & Homelessness
• Email Your Council Members
  Demand NO CHANGES to the RSO formula.
• Schedule a Private Strategy Session
  Understand how these changes affect your specific properties.
  Build a plan to protect income, reduce risk, and secure long-term stability.

The Bottom Line

If the City forces these changes, many small and family-owned operators won’t survive. Los Angeles will lose naturally affordable housing, and renters will face fewer choices.

But it doesn’t have to be that way.

With the right plan, you can:

• Protect your income.
• Preserve your property values.
• Navigate policy shifts with confidence.

Don’t let City Hall decide your financial future.

Take control now—and secure the legacy you’ve worked so hard to build.

Contact us at info@lucrumre.com or visit lucrumre.com to schedule a call and explore Valuation & Advisory, 1031 Exchange, and Multifamily Investment strategies designed to protect and grow your portfolio.

Official Resources:

• Los Angeles Housing Department, RSO 2024 Economic Study (Nov. 2024) LAHD_Report
• City of Los Angeles, Housing and Homelessness Committee Agenda – Oct. 1, 2025Agenda_Items_2___3
• City of Los Angeles, Housing and Homelessness Committee Information – Member Roster

Source: AGGLA