Things You Need To Know About The New Rent Control Laws In California

The average rent in California has been steadily increasing in recent years, reflecting its status as one of the nation’s most expensive states for renters, given that nearly half of its residents rent their homes. To address the challenges posed by rising rents, California has introduced new rent control laws aimed at retaining residents and addressing the affordable housing crisis. These laws, which took effect on January 1, 2021, provided landlords and homeowner’s associations to implement necessary adjustments in accordance with the updated legislation. Here’s a comprehensive guide to understanding these new California rent control laws. 

What Does Rent Control Mean? 

Rent control involves regulations that set limits on rental rates and annual rent increases within specific cities or states. The primary goal is to ensure that lower-income residents can afford to live in these areas by stabilizing housing costs. These policies are crucial in cities with high demand for housing, where market rates often exceed what many residents can afford. 

These laws vary widely but generally aim to prevent steep rent hikes and protect tenants from unjust evictions. They create a framework where landlords must adhere to set rental rates and provide grounds for evictions, typically tied to tenant behavior or lease violations rather than arbitrary reasons. 

These initiatives mark a significant shift towards broader affordability strategies at the state level. By limiting rent increases and stabilizing housing costs, these laws aim to maintain a sustainable supply of affordable housing for low- and moderate-income households, combating the effects of rising market rates in competitive urban environments. 

History of California Rent Control Assembly Bill 1482 

Since the late 1970s, major California cities like San Francisco and Los Angeles have implemented local rent control laws in response to inflation and the scarcity of affordable rental housing. These laws typically restrict annual rent increases by landlords. Depending on the city, rent control may also govern evictions or apply solely to mobile homes. 

In 1995, California voters approved the Costa-Hawkins Act, which superseded existing local rent control regulations. Costa-Hawkins excludes single-family homes, condos, and newly constructed apartment buildings from rent control. It also prohibits vacancy control, allowing landlords to reset rent to market rates after a tenant moves out.  

Amidst California’s ongoing housing crisis, legislators have introduced several bills aimed at boosting statewide rent control and eviction safeguards, while also adhering to Costa-Hawkins guidelines. One such measure, AB 1482, known as the California Tenant Protection Act, was passed in 2019 and took effect on January 1, 2020. 

How Does Rent Control Work in California Under the New Law? 

AB 1482 is a statewide act that has two main functions:   

1. Rent Increases: AB 1482 sets a clear guideline for annual rent increases, allowing up to a maximum of 10%—comprising a base 5% increase plus a local cost-of-living adjustment. This law applies retroactively, determining the initial rent starting from March 2019. Importantly, there are no restrictions on maximum rent levels or limits on how much landlords can adjust rents between successive tenants.  
2. Eviction Protection: Landlords can only evict tenants for a few legal reasons. This applies to tenants who have lived in the unit for more than one year. 

• “At fault” just causes for eviction include not paying rent, criminal activity in the rental unit, or breaching the lease contract. Landlords must give tenants a chance to fix lease violations.  
• “No fault” just causes for eviction include the owner moving into the unit, converting the apartment to a condo, or renovating or demolishing the unit. Landlords must offer the tenant a “relocation fee” equal to one month’s rent in these cases.  

Tenants are responsible for enforcing these rules by hiring an attorney and taking legal action against their landlord if they believe their rights are being violated. 

AB1482 will expire on January 1, 2030, unless legislators extend it. Explore additional significant aspects of Assembly Bill 1482. 

Who Is Exempt From California Rent Control? 

The rent control laws are applicable to rental units such as apartments and multi-family homes. However, not all residential rental properties in California are subject to this legislation. Such properties include: 

1. New buildings which are not yet 15 years old. This is due to the Costa-Hawkins Rental Housing Act.  So, if apartments for rent in California are not older than 15 years, the new rental law will not apply to them.  
2. Owner-occupied buildings with less than three or four units (the number depends on the local regulations) 
3. Detached accessory dwelling units, also known as ‘granny flats’ or ‘mother-in-law units’ 
4. Government-subsidized housing units 
5. Short-term rentals such as Airbnb 
6. Single-family homes and condos 
7. Owner-occupied duplexes 

What Does AB 1482 Mean for California Renters? 

California’s rent control law safeguards tenants’ rights by imposing limitations on rent increases, thereby fostering stability in the rental market. It sets maximum thresholds for rent hikes to ensure fair treatment of tenants and prevent exploitation by landlords. Landlords, including corporate entities, are mandated to adhere to these regulations, which dictate how and when rents can be raised or tenancies terminated.   

Before AB-1482, California established tenant protections through local ordinances and other legislative measures. 

What Does California Rent Control Laws Mean for Landlords? 

California landlords are subject to new rent increase regulations that ensure fair practices and stability for tenants. The law restricts annual rent hikes to a maximum of 5%, coupled with a local cost-of-living adjustment that cannot exceed 5%, resulting in a total cap of 10%.  

Furthermore, California’s rent increase laws stipulate that landlords cannot raise rent more than twice a year. They are also prohibited from evicting tenants solely to increase rent, protecting against unjustified evictions. In cases where landlords need the property for personal use or plan substantial renovations or demolitions, they must provide relocation assistance to tenants before asking them to vacate. These measures aim to balance the rights of landlords with the stability and security of tenants in California’s rental market.  

In understanding the new rent control laws in California, landlords can also consider implementing a Ratio Utility Billing System (RUBS). RUBS, widely recognized as a fair method, allows property owners to allocate utility expenses proportionately among residents based on their usage. This approach is crucial because rent control regulations do not restrict increases in utility prices. Thus, adopting RUBS ensures that landlords can manage utility cost fluctuations while maintaining fairness and transparency in billing practices.  

Are Single-family Homes Subject to Rent Control?  

To terminate a tenancy lasting over one year, specific exemptions must be met, and just cause is necessary. Single-family homes are exempt unless otherwise specified in the lease agreement through written notice. The landlord must sign this notice, clearly referencing it as the principal residence, as specified by the civil code. 

Manage Your Rental Properties With BFPM 

Managing Your Rental Properties with BFPM involves navigating California’s new rent control laws effectively. BFPM ensures landlords stay compliant with these regulations, which cap rental rates and govern annual increases to maintain affordability for tenants. By partnering with BFPM, landlords gain expertise in adhering to legal requirements, minimizing risks of non-compliance or tenant disputes.  

For any guidance related to property management, feel free to schedule a 15-minute consultation call with Beach Front Property Management experts.