Developer Highlights Rent Stabilization as Barrier to Replacing Thousands of Aging Los Angeles Apartment Buildings

Los Angeles, CA – A prominent real estate developer has publicly stated that rent stabilization policies in Los Angeles prevent the demolition and replacement of thousands of decaying and unsafe apartment buildings. Moses Kagan, co-founder and president of Adaptive Realty, a Los Angeles-based real estate development and management company, articulated this view on social media, drawing attention to a persistent challenge in the city's housing landscape.

In a recent tweet, Kagan asserted, "There are thousands of decaying, unsafe, >100 yr old apartment buildings in LA in dense, walkable neighborhoods near transit that should be torn down & replaced with newer, safer, larger buildings, but can't be, because of rent stabilization." Kagan, whose company manages approximately $200 million worth of apartment buildings in Los Angeles, frequently shares insights on real estate trends and challenges.

The city's Rent Stabilization Ordinance (RSO) primarily covers rental properties built before October 1, 1978, limiting annual rent increases and providing tenant protections. Critics of these regulations, like Kagan, argue that they disincentivize property owners from investing in significant renovations or redevelopment, as the potential returns are capped. This can lead to older, less efficient buildings remaining in place rather than being replaced with modern, denser housing.

The debate over rent control's impact on new construction and housing quality is ongoing in Los Angeles. While some studies suggest that moderate rent control may not significantly deter new construction, particularly if new developments are exempt, others point to a reduction in incentives for property improvements and new commercial developments. Landlords often express concerns that rising maintenance, utility, and insurance costs, coupled with rent caps, create an unfavorable business environment.

The Los Angeles City Council is currently considering reforms to the city's rent control policies, with discussions highlighting the tension between tenant protections and landlord viability. Some property owners have reportedly sold their Los Angeles holdings, citing the restrictive regulatory environment. This ongoing policy debate underscores the complexities of addressing housing affordability and supply in a densely populated urban area with a significant stock of aging residential buildings.