California’s housing crisis is not viewed as a surprise in the eyes of many. For years, California has struggled with exponentially increasing rent and generating enough housing at affordable prices for a growing population.
In an effort to reduce the enormous pressure placed upon California residents by increasing rent, Governor Gavin Newson recently signed Assembly Bill 1482 (AB-1482), a comprehensive bill that establishes a rent-increase cap.
Not everyone will be affected by AB-1482, as there are exemptions, however, this law will still affect approximately 8 million Californians. Whether you are a tenant or a landlord, it is important that you familiarize yourself with AB-1482. Understanding this bill will help you stay compliant and prepare you to assert your rights if the need arises.
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What is AB-1482? What will the bill do?
Assembly Bill 1482 is a sweeping rent-increase cap bill signed into law by California Governor Gavin Newsom in September 2019. Beginning January 1, 2020, AB-1482 will limit rent increases across the state of California to 5 percent per year plus the local rate of inflation. The rules will impact cities differently depending on whether they already have rent-control laws. Unless otherwise voted, the measure is expected to expire in 2030.
Will my property be rent-controlled? Or am I exempt?
The cap on rent increases will most strongly impact landlords who own properties built more than fifteen years ago in cities that do not have existing rent-control laws. The state law will exempt buildings that were built within the last 15 years. This is a rolling date for compliance. In other words, buildings that were constructed in 2008 will be subject to the rent increase cap starting in 2023, buildings that were constructed in 2009 will need to comply by 2024, etc.
AB-1482 also exempts single-family owner-occupied homes, including residences in which the owner-occupant rents or leases no more than two units or bedrooms, that are not owned by corporations or real estate investment trusts. So, if you have formed an LLC to rent out your starter home, for example, you will be affected.
The bill also exempts duplexes where the owner occupies one of the units.
Residents who live in cities with existing rent-control laws will remain largely unaffected by this measure. They will, however, continue to be regulated by rent-control laws under the Costa-Hawkins Act, a California state law that allows an owner of residential real property to establish the initial and succeeding rental rates for housing that meets specified criteria, subject to certain limitations.
What else should I know?
In addition to the rent-control measure, AB-1482 will also require landlords to establish “just cause” before evicting tenants that have lived in a unit for more than a year. Landlords who want to evict tenants to build condos or make substantial renovations will be required to pay relocation fees equal to one month of rent.
Under AB-1482, property owners will still be able to evict tenants for the following reasons:
- Nonpayment of rent
- A breach of a material term of the lease
- Nuisance, waste, unlawful, or criminal activity
- Refusal to sign a written extension or renewal of the lease
- Assigning or subletting without the owner’s consent
- Refusal to allow the owner to enter the unit
- The owner moving themselves or family into a unit
- The owner plans to substantially renovate
- The owner is going out of business altogether
Just cause laws will essentially end the ability for a landlord to evict tenants without offering an explicit reason and will only apply to cities that do not currently have local just cause laws in place.