LA renters were promised a more predictable future when the City Council finally voted to cap rent increases for rent-stabilized apartments at 4%. Now Councilmember John Lee is trying to claw that back. His motion would create a carveout allowing landlords with ten or fewer units to charge tenants an additional one percent rent increase every year. He frames it as help for “mom and pop” owners, but tenants see it as a loophole that invites abuse and puts thousands of renters at risk. City Council referred Lee’s proposal to the Housing and Homelessness Committee.

In public comment, a renter warned that the city has “no reliable way of knowing who is a small landlord” and this would let “savvy landlords of all sizes . . . exploit it and raise the rent on already struggling tenants.” Another tenant shared that their family’s rent has been raised “at very hurtful levels for the past five years,” and that adding another way to increase rent “is not sustainable.” One renter summed it up clearly: “A 1% difference can make a huge difference for tenants’ livelihood while it would not meaningfully effect a landlord’s bottom line.”

The city has already studied this. The 2024 Economic Roundtable report commissioned by the Housing Department shows that small landlords are doing fine under the updated rent rules. The study found no evidence that owners of two to four unit buildings face more financial stress than larger landlords. In fact, smaller landlords often have higher rent per unit and lower vacancy rates. They benefit from long-term tenants who keep units full and reduce costly turnover. The report concluded that small landlords do not need special treatment and that a carveout would unfairly shift more of the burden to renters who are already spending far too much of their income just to stay housed.

The new rent cap formula was designed to be fair. It ties increases to actual operating costs rather than arbitrary floors. The goal was to stop a system in which rents could climb faster than inflation even when a landlord’s costs did not. It protects long-term tenants from sudden shocks while still ensuring landlords can cover expenses and generate reasonable income.

Now John Lee wants to reopen that decision at the eleventh hour, right at the Committee stage where the process can be slowed just enough to delay or weaken reform for renters across Los Angeles. Tenants cannot pick their landlord’s portfolio size, so they shouldn’t be punished for living in a duplex instead of a high-rise. This carveout would divide tenants into winners and losers based on something they cannot control, and would reward property owners who are already benefitting from strong returns and rising building values. Once written into law, developers and investors will structure their holdings to exploit it.