How LA’s New Rent Stabilization Formula Could Impact Rental Income in Redondo Beach, Manhattan Beach, Hermosa Beach & Beyond
If you own rental property in Los Angeles or anywhere in the South Bay—Redondo Beach, Manhattan Beach, Hermosa Beach, Torrance—you’ve likely already heard discussions about the City of LA’s latest vote impacting rent increases for rent-stabilized (RSO) units.
As someone who has been in property management since the 1990s, one thing I’ve learned is this: regulatory changes never slow down—and they rarely get simpler for housing providers.
The recent action by the LA City Council is an example of how quickly the landscape can shift, and why property owners need to stay informed.
A Closer Look at the RSO Rent Increase Changes
Originally, the headline was that rent increases would be capped at 60% of CPI. But the actual changes go far deeper and have a broader impact on long-term rental income.
Below is a breakdown of the revised Rent Stabilization Ordinance formula approved by the LA City Council:
RSO Rent Increase Formula: What’s Changing
| Measurement | Existing | Newly Approved |
|---|---|---|
| Calculation Base | 100% of CPI | 90% of CPI |
| Maximum (Cap) | 8% | 4% |
| Minimum (Floor) | 3% | 1% |
| Gas & Electric Allowance (if paid by owner) | +1% each | Eliminated |
| Additional Occupant Allowance | +10% | Eliminated |
In practical terms, this means rental income may increase far more slowly than operating expenses—especially considering rising insurance rates, utilities, property taxes, and maintenance costs across Los Angeles County.
What This Means for South Bay Property Owners
Even if your properties are in Redondo Beach, Manhattan Beach, Hermosa Beach, or other South Bay cities outside LA’s RSO, these changes still matter.
Why?
Because Los Angeles often sets the tone for broader policy trends across Southern California. What starts in LA City regularly makes its way into neighboring jurisdictions over time.
Property owners should consider:
• Updating long-term rent projections
With caps now significantly lower, income growth will be more restricted in regulated areas.
• Evaluating operating budgets
The elimination of gas, electric, and occupancy allowances means owners will absorb more costs.
• Prioritizing upgrades & tenant retention
Strong, stable occupancy becomes even more important when rent increase limits tighten.
• Diversifying portfolios
Owning in multiple cities—some regulated, some not—can help balance your risk.
Why Staying Informed Matters More Than Ever
One of the themes we’re seeing from the Apartment Association of Greater Los Angeles and industry experts is the growing need for owner involvement and advocacy at the local level.
Whether or not you choose to participate politically, being aware of the decisions coming out of City Hall is essential to safeguarding your investments. For many property owners, these rules directly impact long-term financial planning.
How Jamico Properties Supports You
At Jamico Properties, we’ve managed South Bay real estate for more than 30 years. We’ve weathered every iteration of rent control, policy swings, market cycles, and regulatory shifts since the 1990s.
Our role is simple:
help property owners stay compliant, informed, and profitable—no matter how the laws change.
We’re actively reviewing the implications of these new RSO formula updates and will continue sharing guidance as more details become available.
Final Thoughts
Major regulatory updates like this reinforce why being proactive—not reactive—is so important for property owners. Whether you own a single rental home or a multi-unit portfolio, having a knowledgeable management team on your side makes all the difference.
Jamico Properties — Managing South Bay Real Estate Since the 1990s.