How housing providers can protect property value, stay compliant, and maximize NOI in 2025
The Rent Control Reality
For California housing providers, rent control has become one of the most significant forces shaping property value. Between statewide caps under AB 1482 and stricter local ordinances in cities like Los Angeles, Pasadena, Inglewood, and unincorporated Los Angeles County, staying compliant isn’t just about avoiding penalties—it’s about protecting the long-term value of your investment.
At AACSC’s recent class, Unlocking Apartment Value: Raising Rents Under Rent Control, AACSC Operational Advisor Oliver John-Baptiste broke down the practical and legal strategies housing providers must understand to remain profitable while staying within the rules.
This article recaps Oliver’s presentation and Q&A session, giving you the tools to:
● Raise rents legally and strategically.
● Avoid costly compliance mistakes.
● Maintain or improve property valuation under rent control.
The Hidden Cost of Under-Market Rents
One of Oliver’s strongest warnings: the “flat rent trap.”Too often, housing providers avoid making consistent annual increases. Over time, tenants remain at rents hundreds (sometimes thousands) below market, leading to:
● Devalued property: Appraisals and sales are based on income, not potential.
● Reduced NOI (Net Operating Income): Operating costs rise, but income remains
stagnant.
● Limited flexibility: Trying to “catch up” with one large increase is both unlawful and unrealistic.
Strategy: Make small, consistent annual increases (typically 3–8%). Even modest annual adjustments help preserve property value and keep pace with operating expenses.
Legal Framework: AB 1482 vs. Local Ordinances
Understanding the law begins with AB 1482, the statewide rent cap and just cause eviction law.
AB 1482 Basics
● Rent Increase Cap: 5% + CPI (Consumer Price Index), capped at 10%. In Los Angeles County, this has typically meant ~8% per year.
● Frequency: Maximum of two increases per 12 months.
● Base Rent: Increases must be calculated on the lowest rent in the last 12 months.
● Notice Periods:
○ ≤10%: 30 days (35 if mailed).
○ 10%: 90 days (95 if mailed).
Local Ordinances Go Further Many Southern California cities impose stricter rules than AB 1482. Examples include:
● City of Los Angeles (RSO):○ Cap: 3% (5% if landlord pays utilities).
○ Registration: All properties must be registered annually.
○ Relocation fees: Required for certain no-fault evictions.
● Unincorporated LA County:
○ Cap: As low as 1.9%.
○ Registration: Mandatory through the county housing portal.
○ Enhanced notice requirements.
● Pasadena & Inglewood:
○ Require rent boards, registration, and strict caps.
Key Takeaway: Always confirm both statewide AND local rules. Compliance is a two-layer process.
Notice Requirements: Small Errors, Big Consequences
Rent increase notices are highly technical—and even small errors can invalidate them.
Common Compliance Points:
1. Exact Names: Must match the lease agreement.
2. Correct Address: As stated on the contract.
3. Notice Periods: 30/90 days depending on % increase.
4. Delivery Method: Personal service or mail (with extra days added).
5. Local Notices: Some cities require specific forms or additional disclosures.
Best Practice: Serve notices at the beginning of the month, keep copies, and maintain original lease documents.
Lease Types and Flexibility
Oliver emphasized the impact of contract type on compliance and strategy:
● Month-to-Month Agreements: Provide more flexibility to adjust terms, issue notices, and adapt to changing laws.
● Fixed-Term Leases: Lock in both rent and conditions, reducing flexibility until expiration.
Tip: For properties in heavily regulated jurisdictions, month-to-month leases often provide better operational control.
Exemptions and Documentation
Not all properties are subject to AB 1482. Exemptions include:
● Single-family homes & condos, if the landlord is not a corporation and the lease includes the AB 1482 exemption notice.
● Owner-occupied duplexes.
● New construction (within the last 15 years).
Reminder: Exemptions are only valid if properly disclosed in the rental agreement. Missing language = no exemption.
Strategies to Protect Property Valuation
Staying within rent caps doesn’t mean sacrificing value. Oliver outlined several practical strategies:
1. Annual Increases: Always take the maximum legal increase to avoid falling behind.
2. Strategic Renovations: Improvements can justify higher rents and enhance long-term
valuation.3. Documentation: Keep detailed records of property upgrades, maintenance, and rent histories.
4. Market Tracking: Use tools like Rent-o-meter.com to benchmark rents against market rates.
5. Tenant Management: Month-to-month contracts provide flexibility for lawful turnover strategies.
6. Exempt Units: Explore development of new units (e.g., ADUs) that may be rent-control exempt.
Q&A Highlights
Q1: How can I ensure my rent increase notices comply?
● Use the correct statutory language.
● Follow proper service procedures.
● Track rent caps for your area.
● Always document and copy notices.
Q2: What strategies keep me compliant AND maintain property value?
● Small, consistent increases (3–8%).
● Use the maximum allowable increase annually.
● Plan renovations strategically.
● Don’t let rents fall far below market.
Q3: How can I stay updated on local ordinance changes?
● AACSC Resources: Seminars, newsletters, Oliver’s office hours.
● Government Sources: City and county housing websites.● Professional Networks: Local landlord and investor groups.
● Ongoing Monitoring: Review regulations quarterly, subscribe to housing regulation lists.
Key Tip: Regulations change frequently—especially post-COVID—so constant monitoring is essential.
Next Steps for Housing Providers
1. Stay Engaged with AACSC
○ Attend compliance classes regularly.
○ Read updates in AACSC newsletters and publications.
○ Participate in advocacy efforts to keep housing laws balanced.
2. Use Oliver as a Resource
○ Register for Oliver’s Office Hours via the AACSC Events Page.
○ Contact him directly through help@aacsc.org or by phone at (562) 426-8341.
3. Adopt Best Practices
○ Review your current lease forms for AB 1482 language.
○ Audit your rent rolls for under-market rents.
○ Plan consistent increases going forward.
Compliance Protects Value
Rent control isn’t going away. But with the right strategies, housing providers can remain compliant, avoid costly mistakes, and protect long-term property value.
As Oliver emphasized, compliance is not just about avoiding lawsuits—it’s about unlocking your property’s true value. By raising rents lawfully, serving notices correctly, and usingAACSC’s resources, you can run a compliant, profitable, and sustainable rental housing business in California’s challenging legal environment.