Two small North Hollywood rental buildings can sit on the same block with similar units and similar tenants and still fall under different rent rules. If a rental property was first built on or before October 1, 1978, the city's Rent Stabilization Ordinance generally covers it. Since February 2, 2026, that means a yearly increase of 1% to 4%, tied to local inflation. A building completed later and now more than 15 years old usually falls under the state Tenant Protection Act, which allows up to 8.7% for increases that start between August 1, 2026 and July 31, 2027.
On a rent roll, that looks like a big gap. In today's North Hollywood market it mostly isn't one yet. Local rents have been close to flat, so the higher state cap rarely comes into play. The 1978 line still matters to an investor, but it shows up in two other places. One is what happens when a unit turns over. The other is the price per unit buyers will pay on each side of the line.
The number for next July is being set this month
This is the part of the rule that matters right now. The amended ordinance sets the RSO annual increase at 90% of the change in the average Los Angeles–Long Beach–Anaheim CPI. It compares the 12 months ending September 30 with the 12 months before that and rounds to the nearest whole number. If the result comes in under 1%, landlords can still raise rent by up to 1%. No annual increase under this rule can go above 4%.
That 12-month window closed on September 30, 2026. The Bureau of Labor Statistics scheduled its September Los Angeles CPI release for October 14, 2026. So the data that will set the RSO increase for July 1, 2027 through June 30, 2028 is about to be published. LAHD has not announced that number yet. The current rate of 3% covers July 1, 2026 through June 30, 2027.
For context, 12-month inflation in the Los Angeles area ran between 2.9% and 3.7% in each 2026 release through August. The August reading was 3.6%. The formula takes 90% of a 12-month average, so a single month's reading is not the answer. Anyone underwriting a pre-1978 building this fall is working with a number that hasn't been published yet.
What changed, in the ordinance's own terms
The City Council passed Ordinance 188795 on second reading on December 12, 2025, by a 12–2 vote. The Mayor approved it on December 23, and it took effect February 2, 2026. Before the change, the RSO increase had a 3% floor and an 8% ceiling. The ordinance also removed two add-ons that older RSO pro formas often counted on: the extra percentage for landlord-paid utilities and the 10% increase for adding a dependent to a tenancy. LAHD still allows a 10% increase when an additional tenant who is not a dependent moves in, under its own notice rules.
A seller's rent history may include utility add-ons taken before the change. Going forward, the LAHD renter protections page says annual RSO increases can no longer include them. The ordinance also lists conditions that block an annual increase entirely, such as an uncorrected notice of rent reduction or a unit placed in the Rent Escrow Account Program. A buyer can't see those from the listing.
The two rulebooks, side by side
| Pre-1978 RSO building | Post-1978 building, 15+ years old | |
|---|---|---|
| Governing rule | City RSO, Ordinance 188795 | State Tenant Protection Act, Civil Code 1947.12 |
| Current cap | 3% for July 1, 2026 – June 30, 2027 | 8.7% for Aug. 1, 2026 – July 31, 2027 |
| How the cap is set | 90% of the change in average LA CPI, 1% floor, 4% ceiling | 5% plus April-to-April CPI, 10% maximum |
| Utility add-on | Not allowed since Feb. 2, 2026 | Not part of the formula |
| Rent at turnover | Resets to market after qualifying vacancies | Landlord sets new initial rent |
| Scheduled end | No sunset in the ordinance | Statute repealed Jan. 1, 2030 |
The state figure for Los Angeles County comes from April 2026 CPI compared with April 2025: 5% plus 3.7% equals 8.7%. The state cap may also tighten less than people expect. A bill to cut it to 2% plus inflation, with a 5% maximum, did not get out of the Assembly Judiciary Committee in January 2026.
Why the bigger cap isn't paying off right now
A cap only matters if the market would let a landlord charge more than the cap allows. In Q1 2026, CoStar data for the Studio City/North Hollywood multifamily submarket showed 0.0% year-over-year rent growth and vacancy rising to 5.1% from 4.6%. Next door in Van Nuys, Q2 2026 asking rents were down 0.2% from a year earlier. That quarter, 117 new units were delivered and only 57 were absorbed. When market rents aren't rising, a landlord who is allowed 8.7% usually can't collect much of it without losing the tenant.
New supply near the NoHo station adds to that pressure on newer buildings. Construction has started on an 84-unit, seven-story building at 5547 N. Elmer Ave., one block north of North Hollywood Station. Work is also underway on a 59-unit project at 11103 Hartsook St. Metro's District NoHo approval calls for more than 1,400 apartments, with a first phase of about 570. The developer lists the project's completion as Q3 2032. In its Q2 2026 Van Nuys report, Matthews says newer non-RSO buildings are "more directly exposed to recent apartment deliveries and increased competition for tenants."
So in 2026, the higher cap on a post-1978 building works more like an option than a stream of income. It becomes valuable if rents start rising again before the state law's 2030 sunset.
Turnover is where an RSO unit's value moves
LAHD lists the situations that let an RSO unit's rent go to market without department approval. They include a tenant moving out voluntarily, certain evictions such as for nonpayment or a lease violation, and a tenant accepting a buyout agreement. Between those events, the 1% to 4% formula applies.
On an RSO building, the gap between each unit's current rent and market rent therefore matters more than the annual cap does. Two pre-1978 duplexes with identical market rents can be very different investments. In one, both tenants moved in recently at close to market rent. In the other, a long-term tenant pays well below market. When market rents are flat, the first building has little room to grow. The second has room, but only when a qualifying vacancy happens, and the owner doesn't control the timing.
The supply of these units is large. The City Planning Housing Element counts 25,917 RSO units in the North Hollywood–Valley Village Community Plan Area. That count comes from a 2021 planning document, so it describes the scale of the stock, not a current share of it.
What buyers are paying on each side of the line
The clearest 2026 pricing split comes from Van Nuys, the submarket just west of North Hollywood. Matthews' Q2 2026 report, using CoStar data, puts pre-1978 RSO buildings at an average of $184,783 per unit, a 5.6% cap rate and a 10.7 gross rent multiplier. Post-1978 non-RSO buildings averaged $277,568 per unit, a 5.4% cap rate and an 11.2 multiplier. Each newer unit sold for about 50% more.
That gap is not a clean measure of what rent control costs. In the same data, the average RSO sale price was $5,383,360, higher than the $3,555,984 average for the newer buildings. That suggests the older buildings that sold were larger, and building age and condition also affect price per unit. These averages also don't separate out any effect of the new RSO formula on prices. What the numbers do show is that buyers pay much less per unit for pre-1978 stock while the cap rates are only 0.2 points apart.
Recent North Hollywood deals give a range. The Registry reported on October 5, 2026 that a 41-unit complex on Barbara Ann Street sold for just under $5.89 million after more than 30 years with one owner. That works out to roughly $144,000 per unit. An eight-unit building at 5905 Whitnall Hwy closed in 2026 for $1.475 million, or $184,375 per unit, at a 5.88% cap rate. In Valley Village, 48 condominiums at 11925 Kling St. sold together for $15.9 million on June 29, 2026, an average of $331,250 per unit.
Checking a specific building before an offer
- Confirm the certificate of occupancy date and the RSO status through LAHD's property search, which is linked from its RSO overview.
- For each unit, request the move-in date, the starting rent and every increase since then. Then flag any increases that included utility add-ons.
- Compare each unit's rent with current market rent to see where the room to grow is.
- Ask whether any unit is under a rent reduction notice or in the Rent Escrow Account Program, since either one blocks annual increases.
- If the lot has an ADU or JADU, keep in mind that LAHD's list of RSO-covered property types includes both.
Questions investors ask
Does a pre-1978 condo I rent out fall under the RSO cap? LAHD says the RSO doesn't regulate the rent amount on condominium and townhome tenancies that started after December 31, 1995. Separately titled condos can also be exempt from the state cap. That depends on who owns them and on whether the tenant received the required written notice.
Does the new state law SB 1365 change the 8.7% cap? No. Signed September 30, 2026, SB 1365 widens the emergency price-gouging rent limits and takes effect January 1, 2027. It does not change the ordinary annual formula.
Before you make an offer on a North Hollywood duplex or small building, it helps to know which rent rules it falls under and how much room each unit has to grow. Nadia Arreola brings a property-management background to that review, in English or Spanish. Send her an address and she can help you check the rent history unit by unit before you commit. Search Listings or Get a Free Home Valuation to start.
This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.
