How LA’s Rental Policies are Dismantling the Private Investor – and What We Should Do About It
I spent eighteen years as a sports agent and another eighteen in commercial real estate. In both worlds, I learned the same lesson: the most dangerous systems are the ones that sound the most reasonable, and the most dangerous policies are the ones designed to serve someone other than who they claim to. In thirty-six years of negotiating, reading rooms, and watching institutions protect themselves at other people’s expense, I have never seen anything quite as effective or as damaging as what the Los Angeles City Council has constructed around rental housing.
I own apartment buildings in this city, the majority of them RSO units. I am in this market every day. And what I am watching is not a housing policy. It is a slow, methodical elimination of the private investor, announced, each time, as something else entirely.
The proposed ban on Ratio Utility Billing for new tenants is the latest move. On its own, maybe it seems small. But that is exactly how this works. Each measure arrives looking reasonable. It is only when you step back and look at all of them together that the picture becomes clear.
Let’s Look at the Scorecard
Measure ULA was sold to voters as a fix for homelessness and affordable housing. Researchers at UCLA and RAND (not the apartment industry, not a landlord PAC) established a direct causal link between that policy and the loss of nearly 2,000 units of new rental housing per year. Eighteen percent annual decline in new supply. The city is also losing roughly $25 million a year in property tax revenue as a direct result. Sales volume for affected apartment buildings has dropped 81% from pre-tax levels.
Those are peer-reviewed academic findings. Not talking points.
“Small landlords are being pushed out and accelerating the further corporatization of housing in Los Angeles.” — LA City Council Member Rodriguez
Then came the RSO rent formula change. Allowable increases are now capped at 3% annually, well below the rate of inflation, meaning RSO landlords are legally guaranteed to lose ground every single year going forward. This is on top of nearly four years of zero allowable increases during and after COVID, during which insurance, maintenance, property taxes, and utilities kept climbing without pause. I have talked to owners who did the math and realized they were effectively subsidizing their tenants’ housing out of their own retirement savings. That is not a sustainable arrangement for anyone, and it is not what most people picture when they hear the phrase “affordable housing policy.”
In eighteen years of negotiating player contracts, I learned that you can structure a deal to look fair on paper while systematically bleeding one side. That is what this series of policies has done to private investors in Los Angeles. Each measure looks reasonable in isolation. Together, they are a vice.
- 81% Collapse in L.A. apartment building sales volume since Measure ULA (NAI Capital)
- 2,000 Rental units lost per year linked to Measure ULA — UCLA & RAND study
- 30%+ Jump in general liability insurance rates for landlords in Q4 2025 alone
- 52% Rise in premises liability verdicts over $10M nationally in 2024
The Insurance Story Nobody Is Telling
This is something that rarely comes up in these policy discussions: private investors in California are facing an insurance crisis, and it is getting worse fast.
Major carriers have exited the state. General liability rates jumped over 30% in just the fourth quarter of 2025. Premises liability verdicts over $10 million rose 52% nationally in 2024. The city’s own Tenant Right to Counsel ordinance, as well-intentioned as it may be, has added significant litigation exposure on top of an already stressed market. Frivolous suits are up. Premiums are following and “habitability” coverage is almost impossible to find.
When a private investor cannot get affordable coverage, or cannot get coverage at all, the building their tenants live in becomes a habitability problem. Not a landlord problem – a tenant problem. That connection is not being made in the policy conversation, and it needs to be.
The RSO Reality – and Why RUBS Actually Matters Most There
Here is what the conversation about RUBS almost always gets wrong: the framing assumes this is primarily about new construction and market-rate buildings. It is not. The owners most directly affected by a RUBS ban are private investors operating RSO units. The older, rent-stabilized stock that houses a significant portion of this city’s working-class tenants.
There are approximately 650,000 RSO units in the City of Los Angeles. These are buildings constructed before October 1, 1978, where rents have been controlled for decades. Many of those units are held by long-term private investors who have watched their allowable income shrink in real terms every year while operating costs like utilities, water, insurance and trash service have compounded steadily upward. The gap between what those units generate and what it costs to operate them is not theoretical. It is the reason many owners are trying to sell.
When an RSO unit turns over (when a long-term tenant moves out and a vacancy occurs), the landlord has the legal right under California law to reset the rent to market. RUBS is applied on top of that reset rent, passed through transparently as a separate line item based on actual building utility costs allocated proportionally by unit size. The incoming tenant sees exactly what they are paying for utilities and why. Their bill is not fixed; it reflects their actual consumption. If they conserve, they pay less. That is not a burden. That is accountability.
An RSO tenant paying market-reset rent plus a transparent RUBS charge is still paying significantly less than a comparable non-RSO unit and they control their own utility costs.
Non-RSO market-rate units (the newer buildings built after 1978) already rent on average 19% higher than RSO units of comparable size, according to the Economic Roundtable. The tenants this council claims to be protecting with a RUBS ban are, in most cases, moving into older RSO buildings at rents that are still below what the open market would charge. Removing RUBS from that equation does not save them money. It removes their ability to influence what they pay through their own behavior, and it forces the landlord to embed utility costs into base rent as a fixed, uncontrollable expense.
Studies from the National Multi-Housing Council and the National Apartment Association found that buildings using RUBS see water consumption drop by as much as 27 percent. I have seen this firsthand in my own RSO buildings. Since implementing RUBS on vacancy turnovers, water consumption dropped measurably. Tenants report leaks faster. They are conscious of what they use because they can see what it costs. That is exactly what a city facing ongoing drought conditions should want to encourage, not eliminate.
Under the RecycLA program, landlords already face financial penalties when tenants fail to properly separate recyclables or when bins overflow because boxes were not broken down. The city holds private investors financially responsible for tenant behavior. And now it wants to eliminate the one billing tool that gives tenants a direct financial incentive to behave responsibly with their consumption.
Who Is Actually Leaving, and Who Is Moving In
Corporate and institutional investors now own more than 40% of Los Angeles rental units. That number is climbing. When a private investor exits, the buyer often converts to condos to avoid the regulatory environment, which permanently removes those units from the rental pool, and in most cases those are RSO units, the most affordable and most protected housing stock in the city. Nobody tracks that number prominently, but it adds up fast.
RAND flagged this directly in 2024: keep squeezing private investors and you end up with a “survival of the fittest” rental market where only corporate and institutional money survives. That is the Blackstone scenario. That is what this council says it does not want. And that is exactly where current policy is heading.
Council member Rodriguez said it herself during the RSO formula debate: private investors are being pushed out and accelerating the corporatization of housing in Los Angeles. Then this council changed the formula anyway. That disconnect is worth sitting with.
The most affordable rental housing in this city (the RSO stock) is the housing most at risk. And the policies being applied in the name of tenant protection are the ones making it financially unviable to hold. A RUBS ban on vacancy turnovers removes one of the last remaining tools that keeps the math working on those buildings. When the math stops working, owners exit. When owners exit, the units either convert or get acquired by institutional capital. Either way, the tenant loses.
A Smarter Framework – What Should Happen Instead
A blanket ban is a blunt instrument. It is also, based on the available evidence, a solution in search of a problem. Before this proposal moves any further, the city owes its stakeholders, the private investors and tenants alike, an honest answer to a basic question: where is the documented evidence of widespread RUBS abuse in Los Angeles? If it exists, show it. If it does not, the case for a ban collapses on its own.
What the city should do instead is straightforward. Convene a real stakeholder process. Ninety days, landlords and tenants at the same table, housing economists in the room, and build policy from actual findings rather than assumption. That is not a delay tactic. That is how good policy gets made.
Beyond that, there is a workable framework already available that addresses legitimate tenant concerns without eliminating a tool that is functioning well:
- Full disclosure at lease signing: allocation method, total building utility costs, and monthly statements tenants can read and verify. Transparency is a better answer than a ban.
- A real dispute mechanism through LAHD, so tenants can challenge charges they believe are wrong, with actual enforcement behind it.
- A cap on RUBS recovery: actual costs only, no excessive markup above a defined threshold.
This protects tenants. It keeps private investors in business. It supports conservation goals. And it does not accelerate the corporate and institutional takeover of this city’s most affordable rental stock.
A Final Thought
In the agent business, the people who lasted were not the ones who walked into a negotiation swinging. They were the ones who walked in prepared, knew every number in the room, and gave the other side something they could actually say yes to. That is the posture the apartment ownership community needs right now, not louder opposition, but better arguments, better data, and a real alternative on the table.
The private investors of this city built neighborhoods. They housed families for decades in units that would have long since been converted or demolished if the math had not held. They stuck around through rent freezes, rising costs, and a regulatory environment that has made profitability harder every year. They deserve a policy conversation that takes their reality seriously.
Thirty-six years in business has taught me that systems ignoring reality eventually collapse under the weight of their own contradictions. Los Angeles housing policy is at that point. The data is already saying so.
The only question left is whether anyone is listening.
Josh Luchs is Executive Vice President at Kidder Mathews, specializing in multifamily apartment buildings across Los Angeles County. He has transacted over $1 billion in real estate across his career. Prior to commercial real estate, Josh spent eighteen years as an NFLPA-certified sports agent, last serving as Vice President of the Sports Division at the Gersh Agency. In October 2010, he appeared on the cover of Sports Illustrated. He is also the author of “Illegal Procedure: A Sports Agent Comes Clean on the Dirty Business of College Football.”