California’s New Real Estate Laws for 2025: What Investors Need to Know

California’s real estate landscape is changing with new laws taking effect in 2025, impacting landlords, developers, property owners, and investors. These legislative updates cover resident protections, rent control, property safety, zoning changes, tax regulations, short-term rental restrictions, and corporate ownership rules. 

For investors, understanding these changes is critical to maintaining compliance, mitigating risks, and maximizing investment potential. This guide outlines the most significant legal updates for 2025, including the balcony inspection requirements under SB 721 and AB 2579, new eviction regulations, tax adjustments, and environmental mandates. 

New Laws in California 2025 

California’s 2025 real estate laws introduce key changes affecting landlords, investors, and developers. Here is the list of laws in California 2025: 

1. Stricter Rent Control and Resident Protections

California has expanded rent control and resident protections to further regulate rental price increases and eviction processes. 

Key Laws: 

• SB 567 (Just Cause Eviction Expansion) 

• Tightens the just-cause eviction standards, requiring landlords to provide stronger reasons and additional documentation. 
• Relocation assistance is now mandatory for residents evicted under certain conditions. 
• Reduces loopholes used by property owners to bypass existing rent control laws. 

• AB 12 (Security Deposit Limits) 

• Caps security deposits at one month’s rent for both furnished and unfurnished units. 
• Prevents property owners from requiring higher upfront costs from residents. 

Property owners must navigate extended eviction processes due to updated requirements, ensuring compliance with resident protections. Lower security deposit limits create a more accessible rental market, encouraging resident stability while requiring property owners to manage financial risks effectively. Rent adjustments now follow stricter increase caps, promoting fair and predictable rental pricing.

2. Mandatory Balcony Inspections – SB 721 & AB 2579

Following structural failures, California is mandating balcony and deck inspections for multifamily properties. 

Key Laws: 

• SB 721 (Balcony Inspection Requirement) 

• Requires multifamily buildings with three or more units to undergo regular inspections of balconies, decks, stairways, and walkways. 
• Inspections must be conducted by licensed engineers, architects, or building inspectors. 

• AB 2579 (Inspection Deadline Extension) 

• Originally set for January 1, 2025, but now extended to January 1, 2026. 
• Subsequent inspections must be conducted every six years. 

• SB 326 (HOA Exemptions & Separate Condo Rules) 

• Condominiums managed by HOAs follow a different inspection process but must comply with SB 326. 

• Non-Compliance Penalties: 

• Failure to comply may result in civil penalties, fines, or liens on the property. 

Property inspections typically cost between $2,000 and $10,000+, depending on the building size. Proactively addressing structural risks ensures compliance and enhances property safety. Meeting inspection deadlines helps investors avoid penalties and legal issues while maintaining the property’s long-term value.

3. Zoning & Development Changes – SB 9, SB 423, and AB 1033

To increase housing supply, California is making zoning regulations more flexible. 

Key Laws: 

• SB 9 (Duplex & Lot-Splitting Expansion) 

• Allows single-family homeowners to subdivide their lots and build duplexes without city council approval. 
• Encourages small-scale housing development in suburban areas. 

• SB 423 (Fast-Track Housing Development Approvals) 

• Extends the SB 35 streamlined approval process for affordable housing projects. 
• Applies to cities that fail to meet housing goals. 

• AB 1033 (New ADU Sales Rules) 

• Allows Accessory Dwelling Units (ADUs) to be sold separately from the main house. 

Investors can now easily convert single-family lots into duplexes or multifamily properties, creating more housing opportunities. The approval process for affordable housing developments is faster, allowing projects to move forward with fewer delays. Additionally, ADUs offer greater investment potential with new flexibility in sales, making them a valuable addition to any real estate portfolio.

4. Environmental & Sustainability Regulations – SB 49, AB 68 & SB 222

California is pushing for sustainability, affecting how properties are built and maintained. 

Key Laws: 

• SB 49 (Solar Panel Expansion) 

• Requires solar installations on certain multifamily properties. 
• Incentivizes renewable energy use in residential developments. 

• AB 68 (Energy Efficiency Upgrades) 

• Older buildings must meet new energy efficiency standards or risk fines. 

• SB 222 (Water Conservation Rules) 

• Stricter limits on landscaping water usage for new developments. 

Investors can enhance property value by making sustainable upgrades, ensuring long-term savings on energy costs. Green investments may qualify for valuable tax incentives, reducing overall expenses. Upgrading older properties to meet new efficiency standards keeps them compliant and more attractive to eco-conscious residents.

5. Property Tax & Transfer Law Updates – SB 131 & AB 1206

New tax policies impact inheritance and commercial property transfers. 

Key Laws: 

• SB 131 (Prop 19 Adjustments) 

• Changes how inherited properties are taxed, potentially increasing tax bills for heirs. 
• Family-owned properties may lose their lower tax assessments upon transfer. 

• AB 1206 (Commercial Property Reassessment) 

• Corporate property transfers now trigger tax reassessments, resulting in higher property taxes. 

Heirs should prepare for potential increases in property taxes on inherited real estate. Commercial real estate transfers may involve higher costs, making strategic planning essential for maximizing investment returns.

6. Stricter Eviction & Foreclosure Protections – AB 1331 & SB 903

New resident and homeowner protections aim to prevent evictions and foreclosures. 

Key Laws: 

• AB 1331 (Extended Eviction Notices) 

• Requires longer notice periods before eviction. 

• SB 903 (Foreclosure Prevention Law) 

• Offers added protection for homeowners facing foreclosure. 

Property owners now have more time to navigate eviction processes effectively. Extended foreclosure timelines provide opportunities to explore alternative solutions and investment strategies for distressed properties.

7. Short-Term Rental (STR) Restrictions – SB 584 & AB 959

California is tightening regulations on Airbnb-style rentals. 

Key Laws: 

• SB 584 (Short-Term Rental Licensing & Taxes) 

• Requires STR owners to register with local governments. 
• Higher taxes and fees for short-term rental operators. 

• AB 959 (City-Level STR Caps) 

• Allows cities to limit the number of short-term rentals allowed per area. 

Short-term rental owners can streamline operations by meeting new licensing requirements. While operational costs may rise, these changes promote a more structured and sustainable rental market, ensuring long-term profitability and compliance.

8. Corporate Landlord Regulations – SB 395

California is limiting corporate ownership of single-family homes. 

Key Law: 

• SB 395 (Corporate Ownership Restrictions)  

• Places caps on the number of single-family homes that corporations can own. 

This law levels the playing field by limiting large investment firms, creating more opportunities for independent investors to enter the residential market. With fewer corporate buyers dominating the space, individual investors can secure more properties and expand their portfolios with greater ease.

9. Affordable Housing Incentives – SB 439 & AB 1033

California is boosting affordable housing incentives for developers. 

Key Laws: 

• SB 439 (Expanded Tax Credits) 

• Increases financial incentives for affordable housing projects. 

• AB 1033 (Faster Permitting Process for Low-Income Housing) 

• Speeds up development approvals for designated affordable projects. 

Investors can take advantage of increased tax benefits for affordable housing projects. The streamlined permitting process accelerates approvals, minimizing delays and ensuring faster project completion. 

How to Prepare for These Changes 

1. Review lease agreements to ensure compliance with rent control laws. 
2. Schedule balcony inspections before the January 1, 2026 deadline. 
3. Adjust investment strategies for new zoning and STR regulations. 
4. Monitor property tax changes to avoid unexpected costs.
5. Plan for energy-efficient upgrades to stay ahead of sustainability laws. 

Stay Ahead of 2025 Laws with Expert Property Management 

Navigating California’s 2025 real estate laws requires expert guidance and proactive management. At BFPM, we help investors stay compliant, maximize returns, and adapt to new regulations with ease. Our comprehensive property management services ensure that rental properties meet legal requirements, safety standards, and resident expectations. Whether you need assistance with rent control compliance, balcony inspections, or zoning adjustments, our team is here to help. Partner with BFPM to safeguard your investments and thrive in California’s evolving real estate market.