California Rent Control

What is AB 1482 in California? What is Rent Control in California? Now that Newsom has signed the bill, how will it affect Investors and Renters going forward?

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As of October 8th 2019, Governor Gavin Newsom signed the assembly bill ab1482 passing california rent control. The bill limits hiking rents more than 5 percent, plus local inflation , in one year. This means that California rents are now under control of the state. AB 1482 will go into effect on Jan. 1st through year 2030.

All residential rental properties are affected by AB 1482 except: properties built within the last 15 years (this will be a rolling 15yrs going forward) as well as single-family residences & condos, unless those properties are owned by a REIT or Corporation. To you own an SFR or condo that is a rentals and being held in a Limited Liability Corporation (which is fairly common), those properties ARE included in this new law.

AB 1482 also imposes “Just Cause” eviction rules starting on January 1, 2020, which require owners to provide one month’s rent as relocation assistance (or a 1 month rent waiver) for “no fault” evictions, when a renter has been in occupancy for 12 months (or 24 months if two renters are in the same property). These “no-fault” evictions still allow an owner to vacate a unit for a family member to move in, as well as if the owner intends to demolish or substantially remodel the property, however the owner will now need to waive or pay the tenant at least one month’s rent (again, local regulations will apply if stricter than AB 1482). Some owners and property managers have mentioned changing to a 11-month lease term on new leases, in order to maintain their ability to terminate a lease without additional cost. AB 1482 didn’t change the “at-fault” eviction process too much (whereby tenants are being evicted for not complying with their lease terms), however it does spell-out detailed permissible reasons to evict and time periods for a tenant to cure the violation (before issuing a notice of termination).

Starting on July 1, 2020, AB 1482 also requires owners to provide Notice (in both new leases and in renewals), informing tenants about California’s rent increase limits and eviction terms for properties affected by AB 1482. For properties exempted from AB 1482 (SFRs, condos and buildings less than 15 years old), both new and renewal tenants will need to be provided a Notice stating that the property is NOT subject to the rent control limits.

This will affect cities that don’t have rent control bills and also expand rent control in those that do. The bill is designed to keep renters in their homes after rents have risen so much in recent years along with help prevent “rent gauging” which has been a big problem in some areas.

While this measure will likely help renters it will also stymie construction of new housing which we definitely need more of especially with our already low inventory in most areas. Keep in mind the bill does not apply to buildings that opened in the last 15 years and it would exempt Single Family Homes and Condos unless they’re owned by a corporation and duplexes where the owner lives in one of the units.

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