What You Need to Know About the New Rent Control Law and How It Affects You

Statewide rent control is here. Many owners are unaware of the new rent control law, what it entails, and how it affects their property values and management methods. For buyers, this new law will change the way that they forecast future rents and initial investment. This information and these resources are extremely important for all owners and investors to understand.

AB 1482: 3-part rent control law:

  1. Rent Cap
  2. Just Cause Evictions
  3. Relocation Fees

1. Rent Cap: limits how much you can raise the rents.

  • The new law allows 5% + Consumer Price Index (CPI). In Los Angeles, the CPI is currently at 3% making the total allowable rent increase 8%. This will vary by region as cost-of-living varies.
  • There is a retroactive clause with an effective date of March 15, 2019
    •  Example: On April 1st, a landlord raised their rents by 15%. This is allowed, but January 1st, 2020 they must take their rents back to the allowable 8%.
  • Exceptions: Single family residences, condos, townhomes, and duplexes that are owner occupied. If you are exempt or believe you are, you must give tenant notice come December.

2. “Just Cause” Evictions: governs when evictions are permissible or prohibited and the necessary procedures to follow. Owners can no longer terminate tenancy for no reason.

  • Applies to tenants who have occupied the property for longer than 12 months.
  • “At fault” eviction: Permissible if tenant has violated the lease in one manner or another.
    • Examples: tenant(s) have become a nuisance, are engaging in criminal behavior, have moved in individuals who are not on the lease, owner gave a notice to enter but they did not grant access.
  • “No Fault” eviction: Permissible regardless if tenants have violated the lease. Allowed if the owner that wants to live in the unit themselves or allow a family member to reside there. Also, if an owner wants to remodel extensively, the eviction is permissible, however, this may trigger rent relocation.

3. Rent Relocation: There are two “umbrellas”, one at the State level and one at the City level

  • The state requires one month’s rent when a relocation payment is required, however, Long Beach requires two months’ rent.
  • Long Beach laws says that if you own a duplex, triplex, or a single fourplex you are not required to pay rent relocation. However, the state of California says you are required to pay rent relocation. If required to pay rent relocation by the City, your relocation fees will be higher than at the state level.
  • Emergency Ordinance: prevents all No-Fault evictions from September 12th, 2019 through the end of the year.
  • Rent relocation exemptions at the State level: any duplex or triplex that has one unit owner-occupied or a building that was built within the last 15 years.

4. How does this impact property values?

  • Owners are becoming upset and we are anticipating an increase in inventory, while buyers will be pulling back.

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