On Tuesday, October 8th, 2019, California Governor Gavin Newsom officially signed Assembly Bill 1482. This bill is the California rent control law, and it goes into effect starting in January of 2020. The California rent control prevents landlords from instituting significant rent hikes.
Once the law officially goes into effect, California will regulate how much rent prices can increase in a calendar year. It caps rent increases at 5% plus the local inflation rate. Each city in California that already has rent control laws in place will have varying rules, and this law won’t override them. The law is good until 2030. Then, it’ll expire until lawmakers decide to extend it.
Understanding the California Rent Control Law
Along with protecting tenants against significant or multiple rent hikes in a year, this law specifies how you as a landlord can raise the rent. It also adds a slightly complicated layer to the eviction process.
Not all units are bound by this new rent control law, and both landlords and tenants have to know their rights. Lawmakers are hoping to fight California’s housing crisis with this law, and there is a debate about whether or not it will help. One side insists it protects renters from facing rent increases they can’t afford, which could force tenants to move in search of more affordable housing. The other side claims that cutting into the landlord’s profit margins could cause them to look for reasons to evict so they could raise the rent before they take on a new tenant.
Buildings Affected by California’s Rent Control Law
This rent control law applies to traditional rental units like those inside apartment buildings. If you currently rent multi-family housing units with no local rent control laws, this law will most likely apply to your building. Other residential properties you own, such as duplexes and single-family homes, may be affected.
However, there are also properties protected under the Costa-Hawkins Rental Housing Act that aren’t subject to rent control. Privately-owned single-family homes, units, and condominiums built after February 1, 1995 are exempt. Owner-occupied buildings with no more than three or four units, short-term rentals, detached units that you can’t sell independently of the main property, and government-subsidized housing anywhere in California except in San Francisco and Berkeley are exempt.
Any building erected 15 years ago (2005) or less is also exempt, but the law has a rolling date attached to it. This means that buildings constructed in 2006 will remain exempt until 2021, and buildings in 2007 are exempt until 2022, and so forth.
How Much Can Rent Increase Per Year?
In a 12-month period, you will only be able to raise your tenant’s rent one time. The limit for rent increases is 5% per year plus local inflation. However, it can never exceed 10% per year.
Say you rented out property in the Los Angeles County metro area with no local rent control laws, and you charged $1,550 per month. The area’s inflation rate is 3.8%. By law, you can raise your rent a maximum of 8.8% for that year, and the tenant would pay an additional $136.40 per month. The law is retroactive to March 15, 2019. Whatever amount your tenant spent on rent that month will be the basis for January’s 2020 increase cap.
California Rent Control Law and Evictions
This law has additional complications for evictions. Usually, the tenancy ends when a fixed-term lease expires, your tenant gives notice, or you give your tenant ample notice in a month-to-month lease. In these instances, it’s legal for you to ask a tenant to vacate the rental without providing a reason. And, you can’t ask a tenant to leave out of retaliation or for a discriminatory purpose.
There are “just cause” ordinances under rent control laws that prevent you from evicting your tenants just to increase the rent without a valid reason. Acceptable reasons backed by the law to remove a tenant from your property include:
- Tenant engages in illegal activities on the property or in the residence such as damaging property, dealing drugs or disturbing the neighbors
- You want to move into the unit yourself or move a family member in
- You want to substantially remodel the property, which you can’t do while there are occupants
- The tenant violated lease terms like allowing unauthorized roommates or failing to pay the rent
If you violate the rent control laws, you can face civil or criminal penalties.
Municipality Restrictions and Ordinances
|Landlords are limited to the base rent charged as of 9/1/19 plus an annual general adjustment. The AGA is currently 2.8%
|Alameda, California Code of Ordinances 6-58 – 6-58.132
|Once per year up to 65% of the regional Consumer Price Index (CPI)
|Berkeley Municipal Code 13.76.110-13.76.120
|Increase rent once every 12 months with a cap of 3% or CPI rate for the area
|Beverly Hills Municipal Code 4-6-3
|City of Commerce
|Restricted to a 3% increase every 12 months
|City of Commerce Emergency Ordinance #689
|Based on rent amount charged on 6/11/19 with a 3% cap every 12 months
|Culver City Municipal Ordinance 2019-011
|East Palo Alto
|80% of the regional CPI’s percentage. May not go over 10% in 12 months
|East Palo Alto California Code of Ordinances 14.04.010 – 14.04.300
|Increases over 5% get mediation and binding arbitration
|Gardena Municipal Code 14.04.101 – 14.04.300
|5% absent exception per year with banked increases not exceeding 10%
|Hayward Municipal Code 12:1.01 – 12:1.21
|Base amount is the rent charged on 6/18/19 with one increase every 12 months. Capped at 5% base rent. Units with a base rent of less than 80% of the CPI rate can increase 8% per year
|City of Inglewood Ordinance No.: 19-13
|One increase every 12 months based on the CPI rate for the region with a 4% increase cap
|Los Angeles Municipal Code 151.00-155.09
|Unincorporated Los Angeles County
|3% annual rent increase limit, retroactive to base rent prices as of 09/11/2018.
|City of Los Angeles Interm Rent Stabilization Ordinance
Contact Express Evictions for More Information Regarding California’s Rent Control Law
If you’d like to know how your municipality’s rent control laws work or how they’ll impact your renting practices, contact us. We’re willing to answer your questions and set up a consultation today!