Two San Pedro Duplexes, Built Years Apart, Now Grow Rent on Different Tracks

Picture two San Pedro duplexes on the same block with the same rents. One got its certificate of occupancy in the summer of 1978. The other was finished a few years later. For a lease renewal this year, the older building can raise rent by 3%. The newer one, if California's statewide rent cap covers it, can raise rent by up to 8.7%. The difference comes from the building's construction date.

That gap opened on February 2, 2026, when Los Angeles' rewritten Rent Stabilization Ordinance took effect. If you are underwriting a small income property in San Pedro this fall, the construction date now belongs near the top of the offering memo. It shapes income growth for as long as you hold the building.

The construction date sets the ceiling

The RSO generally covers rental units first built on or before October 1, 1978. That includes duplexes and parcels with two or more single-family homes on them. Units built after that date fall outside the city ordinance. Many of them fall under California's Tenant Protection Act instead, which generally applies to rental housing more than 15 years old.

Here is how the two tracks compare as of this month:

The RSO side comes from the LA Housing Department's allowable rent increase bulletin. The state side comes from the California Attorney General's rent cap chart.

Put dollars on it. A unit renting for $2,500 a month can go up $75 at renewal under the RSO's 3%. A covered unit under the state's 8.7% maximum can go up as much as $217.50. The state figure is a ceiling, and the market decides whether a tenant will pay it. Still, the gap repeats every year you own the building, and each year's increase compounds on the last.

What the February rewrite removed from the old pro forma

Plenty of San Pedro income-property spreadsheets still run the formula Los Angeles used for decades. Under that formula the RSO increase tracked 100% of regional CPI, with a 3% floor and an 8% ceiling. Owners who paid all of a building's gas or electricity could add 1% for each utility, for a maximum of 10%.

The City Council voted 12–2 on November 12, 2025 to replace it, KTLA reported. It was the first overhaul of the ordinance in more than four decades. The record is Council File 23-1134. As of February 2, 2026, the rewrite made four changes that hit an older building's income line:

• A lower ceiling. The annual increase is capped at 4%, down from 8%.
• A lower floor. In a low-inflation year the increase can be as small as 1%, down from a 3% minimum.
• No utility add-on. The annual increase can no longer include an extra percentage for landlord-paid utilities.
• No dependent add-on. The extra 10% for adding a dependent to the tenancy is no longer allowed. A 10% increase for an additional tenant who is not a dependent remains.

The utility change matters most to anyone buying an older San Pedro building where the owner pays the gas or electric bill. Under the old rules that cost came with up to two extra points of annual increase. Now the owner pays the bill and gets nothing back on the rent. A seller's rent roll built under the old math can describe growth the new rules no longer allow.

Most of San Pedro's housing is on the slower track

This would matter less if pre-1978 buildings were rare. In San Pedro they make up most of the housing. The Census Bureau's 2024 American Community Survey five-year estimates count 24,423 housing units in ZCTA 90731. About 18,371 of them, or roughly 75%, were built before 1980.

Treat that as an estimate and a proxy. The Census groups construction years by decade, so its 1980 cutoff doesn't line up with the RSO's October 1978 date. The count includes owner-occupied homes as well as rentals, and a ZCTA doesn't exactly match the postal ZIP. Even so, most of the duplexes, triplexes and fourplexes that come to market here are likely to be RSO buildings. The newer buildings that run on the faster track are the minority, and listings that mention the construction date are worth reading closely.

The newer side has fine print too. The state cap's new-construction exemption rolls forward each year, so a building becomes covered once it is more than 15 years old. A single-family home or condo can be exempt only if it isn't owned by a REIT, a corporation or an LLC with a corporate member, and the tenant receives the required written exemption notice. That exemption doesn't apply when another dwelling sits on the same lot. A two-unit property is exempt only if the owner lives in one unit for the entire tenancy. The City and County of San Francisco's official Tenant Protection Act summary lays out these conditions. A newer duplex that qualifies for one of those exemptions may not be under the 8.7% cap at all.

Where an RSO rent resets, and where it stays put

On an older building, a slow annual increase pushes more of the value onto turnover. Both the city and the state allow rent to reset when a unit changes hands under certain conditions, and the conditions decide whether any upside exists.

LAHD's bulletin says an owner may set any rent after a voluntary vacancy. It lists three other reset cases: eviction for nonpayment of legal rent, an uncured violation of the rental agreement, and a compliant tenant buyout. The same bulletin says rent must stay at its prior level after other kinds of vacancy, such as a unit vacated for owner, family or resident-manager occupancy. At the state level, Civil Code section 1954.53 generally lets an owner set the opening rent for a new tenancy. It bars that reset where the prior tenancy ended because of the owner's termination notice.

Some of that history can transfer to the buyer:

• Past buyouts. A buyout is not an eviction, and it has its own process. The landlord gives the RSO disclosure notice before making an offer, signs a compliant written agreement, and files both with LAHD within 60 days. The tenant can rescind within 30 days. LAHD's buyout page covers the steps. A unit that a seller re-rented after a buyout depends on that paperwork having been done.
• Units withdrawn under the Ellis Act. LAHD records constraints against a withdrawn property, and those constraints apply to any later owner, according to LAHD's Ellis Act guidance for property owners. A former tenant's right to return can last 10 years. If a withdrawn unit is re-rented within five years, its rent is limited to the lawful rent at the time of withdrawal plus allowed RSO increases, according to LAHD's renter guidance.
• The sale. LAHD's current RSO overview lists the allowed eviction grounds and doesn't include a sale among them. No-fault evictions require relocation assistance.

How each unit came to its current rent and its current tenant is part of what you are buying.

The paperwork that comes with the deed

Once escrow closes, a few items become the new owner's job:

1. Confirm the status before you price the building. Look up the address in ZIMAS and open the Housing tab. LAHD notes that a "Yes" means at least one unit on the property is covered, which may not be every unit.
2. Register within 45 days. LAHD gives new owners 45 days to register the rental property. Covered units also need annual registration and a Rent Registry filing. LAHD's ownership form has a "New Owner" option and asks for proof of ownership. Its instructions warn that missing the 45-day window can leave fees owed on exempt units.
3. Budget the annual fees. For 2026, LAHD charges $38.75 per RSO unit and $67.94 per SCEP unit each calendar year. The fees aren't prorated and are due by the last day of February to avoid a delinquency, according to LAHD's annual bill page. Owners may pass half of each fee to tenants, which works out to $1.61 a month for RSO and $2.83 a month for SCEP. The SCEP pass-through requires that the owner has paid the fee and given 30 days' written notice.

The next RSO number is already locked in the data

The RSO increase is calculated from the CPI average for the 12 months ending September 30. That window closed last month, so the inflation data behind the July 2027 increase is already fixed. LAHD hasn't yet posted a rate for July 1, 2027 through June 30, 2028. The department says it will continue to publish the annual figure. Under the new formula, that figure will fall between 1% and 4%. For a buyer closing on an older San Pedro building this winter, LAHD's published rate is 3% through June 2027, and the rate after that hasn't been announced. Use the LAHD bulletin as the reference. The department's online calculator still shows the 2025–26 period in its headline.

Quick questions

Does the RSO apply in San Pedro, or only in central Los Angeles? It applies citywide, and LAHD's registration bulletin names San Pedro specifically.

Is the AG's chart the right place to check the Los Angeles RSO formula? Use it for the state cap. The local-ordinance section of the same page still shows LA's old 3% to 8% range, so check the city's current rule against LAHD.

Roughly how many units does the RSO cover citywide? LAHD put the figure at about 624,000 units in 118,000 properties as of March 2026.

This post is general information about rules that apply to rental property. It isn't legal, tax or financial advice, so confirm how they apply to a specific building with a real estate attorney, CPA or LAHD before you make an offer or set a price.

If you own an older San Pedro duplex or fourplex and want to know how buyers will price it under the 2026 rules, or you're weighing a pre-1978 building against a newer one, Gary Krill and Krill & Associates can go through the rent roll, the construction date and the LAHD history with you before the building goes to market.