On January 1st, 2020, California’s new Tenant Protection Act1 became law. Under Assembly Bill 1482, most landlords are now subject to statewide rent control measures, which make it illegal to raise rent more than 5% plus local inflation rates in one year.
And that’s not all. Whether you’re a landlord or a tenant, continue along for a crystal-clear explanation of everything you need to know about the new bill.
Contents
- Why Does California Need a Rent Control Law?
- What is the Tenant Protection Act (AB 1482)?
- Eviction Updates Under the Tenant Protection Act
- Sources
Why Does California Need a Rent Control Law?
While the United States’ most populous state may be one of the most economically sound in the country, it also has some of the highest homelessness2 and poverty rates. The federal government outlines two rates when comparing state-by-state poverty rates — the “official” and “supplemental” measure. California’s official poverty rates hit somewhere near the middle3 of the 50 states, but when using the supplemental measure4, which takes into account cost of living and other factors—and thought by many to be a more accurate metric—California’s poverty rate of 18.2% is only topped by Washington DC5.
What is the Tenant Protection Act (AB-1482)?
Effective January 1st, 2020, AB-1482 caps annual rent increases at 5% plus localized inflation rates. Even with inflation combined, annual rent increases are never permitted to surpass 10%. This law is set in stone until 2030, but there are quite a few exemptions and other matters outlined in the bill.
When Did it Take Effect?
Though the new rent control law was signed on October 8th, 2019, and became law on January 1st, 2020, it is retroactive to all rent increases subject to the new law that were made on or after March 15th, 2019. This means that the amount of rent that a tenant paid up until that date will be the amount new increases will be based upon.
Cap on Rent Increases
Under the Tenant Protection Act, rent raises for qualifying units are capped at either 5% plus regional inflation or 10% of the lowest amount of rent charged at any instance during the 12 months before the increase — whichever of those options is less.
For example, if you live in Riverside, where the inflation rate is currently 2.3%6, the maximum rent increase would be 7.3% (5 + 2.3). In a hypothetical scenario where a city’s inflation rate hit 15%, the maximum rent increase would be 10%.
If a landlord chooses to raise rent, they are subject to the above limits per annum. Rent may be raised a total of two times in a 12-month period, however, the culmination of each may not exceed the cap.
Cities With Existing Rent Control Laws
The limit on rent increases affects those who live in cities that do not have existing rent control laws. If a city in California already possesses a more restrictive rent control measure, the statewide measure will not wipe it out, but it would cover qualifying units that are not covered under the city or region’s ordinance.
For a list of cities and counties with existing rent control laws, visit Nolo’s rent control chart7.
Exemptions
The increases apply to all “real residential property” as defined in Civ. Code, § 1954.51, which states “any dwelling or unit that is intended for human habitation.” As such, the following types of properties are exempt:
- Commercial
- Industrial
- Agricultural
- Other types of property not containing a dwelling unit
Moreover, the following types of rentals are exempt from the Tenant Protection Act:
- Residential structures that were built in the last 15 years. However, while buildings constructed in 2006 are exempt this year, the compliance date is rolling — meaning that in 2021, those buildings (built in 2006) will be subject to AB 1482.
- Single-family owner-occupied homes leasing two or fewer bedrooms that aren’t owned by corporations or real estate investment trusts
- Owner-occupied duplexes
- School dorms occupied by students
- Affordable housing restricted by a deed or regulatory agreement with a government agency
Eviction Updates Under the Tenant Protection Act
Landlords can still evict tenants for reasons currently valid under the law, such as non-payment of rent and lease violations. However, the Tenant Protection Act offers extra eviction armor by requiring landlords to provide “just cause” for non-renewal of leases or evicting tenants that have lived in the residence for more than one year.
If landlords wish to remove tenants to make large renovations, build condos, or if they or an immediate family member choose to move into the unit, they must pay the tenant relocation compensation in the amount of one month’s rent. The “just cause” rules will not apply to cities and counties with their own just cause ordinances.
Sources
- https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB1482
- https://www.statista.com/statistics/727847/homelessness-rate-in-the-us-by-state/
- https://www.statista.com/statistics/233093/us-poverty-rate-by-state/
- https://www.census.gov/content/dam/Census/library/publications/2019/demo/p60-268.pdf
- https://www.sacbee.com/article234920662.html
- https://www.bls.gov/regions/west/news-release/consumerpriceindex_riverside.htm
- https://fileshares.nolo.com/dl/FvVaW8qFYI/