Rethinking Measure ULA: How the “Mansion Tax” Has Impacted Apartment Owners, Developers, and Renters

Measure ULA is often described as a “mansion tax,” but that label obscures its real impact. In practice, Measure ULA applies broadly to commercial real estate transactions—including multifamily apartment buildings—and its effects have been felt not only by developers and owners, but by renters across Los Angeles.

Many tenants oppose changes to ULA because they believe new development primarily produces high-end apartments they cannot afford. That concern is understandable in a city where housing costs have outpaced wages for years. But the experience since ULA’s passage shows that the tax has constrained housing supply and reinvestment in ways that ultimately affect renters as much as property owners. Understanding how Measure ULA operates in practice helps explain why these outcomes have unfolded.

What Measure ULA Really Covers

Despite its nickname, Measure ULA applies to all real estate sales over $5 million within the City of Los Angeles, including:

• Multifamily apartment buildings

• Mixed-use residential properties

• Office and retail buildings

• Industrial properties

  
  

This means that many mid- to large-scale apartment buildings—often the very properties that support reinvestment, rehabilitation, and long-term housing stability—are subject to the tax.

The tax is imposed on the seller at:

• 4% on sales over $5.3 million

• 5.5% on sales over $10.6 million, applied to the entire purchase price

  
  

For example, the sale of a $15 million apartment building triggers approximately $825,000 in ULA tax, due at closing, on top of five to seven percent in transaction fees.

Where the Revenue Goes—and Why Tension Emerged

Revenue from Measure ULA is dedicated to affordable housing and homelessness prevention, including:

• Affordable housing construction and preservation

• Tenant protections and eviction prevention

• Supportive housing and homelessness services

  
  

These goals are widely supported. The challenge lies in how the revenue is raised. The tax is collected at the moment of sale—the same moment when capital is typically freed up to reinvest in housing, upgrade aging buildings, or finance new apartment construction.

What Has Actually Happened in the Multifamily Market

Multifamily Development and Reinvestment Has Slowed

Since Measure ULA took effect, transaction costs for apartment properties have increased materially. As a result:

• Apartment sales have slowed, particularly for larger multifamily properties

• Value-add renovations and redevelopment projects have been postponed or canceled

• Capital earmarked for Los Angeles apartments has moved to other regions

  
  

In many cases, the tax is either absorbed by the seller—reducing funds available for reinvestment—or priced into the deal, increasing acquisition costs for buyers. In both scenarios, fewer projects pencil and fewer apartments are built or improved.

Capital Has Left Los Angeles—Including Multifamily Capital

The tax has already reshaped investor behavior:

• Multifamily investors and developers have exited the LA market or redirected capital elsewhere

• Investment has shifted toward smaller properties below the tax threshold or to cities without comparable transfer taxes

• The volume of apartment transactions has declined

  
  

Because multifamily housing production depends on active capital markets, this slowdown directly reduces housing supply and reinvestment.

How These Changes Affect Renters—Especially in Older Buildings

These market shifts matter most in the context of Los Angeles’s existing housing stock.

Renters are often told that slowing development prevents the construction of “luxury” units they cannot afford. But this framing overlooks where most Angelenos actually live.

In Los Angeles:

• Over 70% of housing was built before 1980¹

• More than half of rental units are over 40 years old²

• Large portions of the city’s multifamily stock date to the 1950s–1970s, long before modern seismic, energy, and accessibility standards³

  
  

For most renters, affordability and housing quality are shaped not by new construction, but by the condition and maintenance of older apartment buildings.

Since Measure ULA took effect, reduced transaction activity has meant fewer recapitalizations—often the primary mechanism through which owners finance:

• Seismic retrofits

• Plumbing, electrical, and life-safety upgrades

• Energy-efficiency improvements

• Accessibility upgrades required under current codes

  
  

When these transactions stall, reinvestment is delayed. Over time, aging buildings fall further behind, directly affecting tenant safety, comfort, and quality of life.

A Structural Gap in Measure ULA’s Housing Strategy

While Measure ULA aims to support housing and homelessness solutions, it does very little to support the preservation and modernization of older multifamily housing, even though this is where most renters live.

By increasing the cost of selling or recapitalizing older apartment buildings, the tax:

• Discourages transactions that would otherwise trigger reinvestment

• Limits capital available for major repairs and compliance upgrades

• Locks in aging housing stock without the resources needed to modernize it

  
  

This creates a paradox: a policy intended to help renters can inadvertently reduce investment in the housing they already occupy.

The City Council’s Response: What Reform Discussions Include—and What They Don’t (Yet)

Recognizing the unintended impacts of Measure ULA on housing production, the Los Angeles City Council is advancing potential amendments for the June 2026 ballot. These discussions reflect growing concern that the current structure of the tax is discouraging apartment construction and slowing housing delivery.

What Is Currently Being Discussed

As of now, reform proposals focus primarily on encouraging new housing production, including:

• Potential exemptions or reduced ULA rates for newly constructed multifamily housing, particularly buildings completed within the last 10–15 years

• Expanded exemptions for 100% affordable housing projects

• Relief for nonprofit and mission-driven housing developers

  
  

These proposals are aimed at preventing Measure ULA from penalizing new housing at the very moment Los Angeles needs more supply.

What Is Not Included—but Should Be

Notably, current reform discussions do not meaningfully address older multifamily housing, even though these buildings house the majority of renters in Los Angeles.

There are no proposed carveouts tied to the preservation or reinvestment of older apartment buildings, such as:

• Properties requiring seismic retrofits or major life-safety upgrades

• Naturally occurring affordable housing in buildings decades old

• Transactions where sale proceeds would be reinvested into habitability or modernization

  
  

This is a significant gap. While exempting new construction is important, housing stability for renters depends just as heavily on reinvestment in existing buildings—especially those built long before modern standards.

Why This Gap Matters for Renters

Focusing reform solely on new construction overlooks where most renters actually live. When older apartment buildings cannot access reinvestment capital because transactions are discouraged or made prohibitively expensive, the consequences fall directly on tenants:

• Deferred maintenance and delayed safety upgrades

• Slower compliance with seismic, accessibility, and energy-efficiency standards—reducing housing quality without corresponding affordability gains

  
  

If Measure ULA reform is intended to improve outcomes for renters, it must account not only for future housing supply, but for the preservation and modernization of the housing stock that already exists.

A Missed Opportunity—and a Path Forward

The current reform conversation represents progress, but it remains incomplete. A more comprehensive approach would pair incentives for new construction with targeted relief for transactions involving older multifamily buildings, particularly where reinvestment directly benefits tenants.

As the 2026 ballot approaches, Los Angeles has an opportunity to refine Measure ULA in a way that aligns revenue goals with the lived reality of renters—most of whom depend on aging apartment buildings for long-term housing stability.

Why This Matters to Renters, Owners, and Developers Alike

For apartment owners and developers, Measure ULA has fundamentally altered transaction economics and investment decisions. For renters, the effects are less visible but just as real: constrained housing supply, deferred maintenance, and increased competition for existing units.

The debate is not about choosing between tenants and housing production. It is about acknowledging that policies that discourage apartment construction and reinvestment ultimately deepen the housing shortage renters already experience.

A Needed Recalibration

Measure ULA was passed to address a housing and homelessness crisis. Experience since its implementation shows that how revenue is raised matters as much as how it is spent.

As voters consider carveouts and amendments in 2026, Los Angeles has an opportunity to recalibrate—supporting renters not only through funding programs, but by enabling the construction, preservation, and modernization of the apartment housing that millions of Angelenos depend on.

A more balanced approach can strengthen tenant protections, restore reinvestment in older buildings, and help ensure a healthier, safer, and more affordable rental market for the long term.

Footnotes & Data Sources

1. U.S. Census Bureau, American Community Survey (ACS) – Housing stock age data for the City of Los Angeles and Los Angeles County.

2. Southern California Association of Governments (SCAG) – Regional Housing Needs Assessment (RHNA) and housing stock age analysis.

3. UCLA Luskin Institute on Inequality and Democracy – Research on Los Angeles rental housing conditions and aging multifamily stock.

4. Los Angeles Housing Department (LAHD) – Data on rent-stabilized units, naturally occurring affordable housing, and building age.

5. California Department of Housing and Community Development (HCD) – Statewide housing production, preservation, and affordability reports.