What to Expect From Real Estate In 2021For real estate, as for many things, 2020 was a strange year. Despite a pandemic, a recession and unemployment that at one time hit 20 million, 6 million
Oct 1 2019 38376 1
Dated: October 1 2019
Here’s How California’s Rent Control Law Would Work
Within the next few weeks, the governor is expected to enact rent control in California by signing Assembly bill 11482.
That means the state would begin to regulate how much your rent can increase every year, limiting it to 5 percent, plus the local rate of inflation. Once signed, the measure would take effect January 1 and expire in 2030 (unless lawmakers vote to extend it).
“AB 1482 puts teeth in tenant protections without taking an unreasonable bite from property owners,” Assembly Speaker Anthony Rendon (D-Lakewood) said in a statement earlier this month. “This moves us forward in battling escalating housing costs.”
The deadline for the Gov. Gavin Newsom’s signature is October 13. He has said he will sign it.
The legislation is called a “rent cap” bill—not a rent control bill. Its author, Assembly member David Chiu (D-San Francisco), has said the legislation is only designed to prevent the steepest rent hikes as California wrestles with high housing costs and ahomeless crisis.
In the end, they say the positive impacts of AB 1482 will hinge on public awareness of the new rules and effective enforcement. To that end, a breakdown of how the law would work is below.
Would my apartment be rent-controlled?
That depends on where you live. If you reside in a city that does not already have a local rent control law and your rental is at least 15 years old, the answer is most likely “yes.”
What types of buildings would be impacted?
Rent control would be applied mostly to apartments and other multi-families buildings—with some exceptions—along with some single-family homes.
Condos and single-family homes would be exempt, unless owned by a corporation or real estate investment trust. Duplexes where the owner lives in one of the units would also be exempt.
How much would my rent go up?
If you live in a city that does notalready have a local rent control law, rent increases would be limited to 5 percent, plus local inflation, but could never exceed a total of 10 percent.
For example, if you’re renting in Redondo Beach, which does not have its own local rent control law, and you pay $1,550 per month for rent, and Los Angeles County metropolitan area’s inflation rate is 3.8 percent, your landlord could raise your rent as much as 8.8 percent, a monthly increase of $136.40.
To help tenants whose landlords might have gone on a rent hiking binge in anticipation of AB 1482 passing, the law would be retroactive to March 15, 2019. Whatever amount you paid as of that date is that amount by which the increase would be based.
How much is inflation?
The rate of inflation will be tied to the Consumer Price Index in each metropolitan area. In Los Angeles County, it averaged2.2%from 2001 to 2018.
Which communities have local rent control laws?
In Los Angeles County, the cities ofSanta Monica,West Hollywood, Beverly Hills,Culver City and Inglewood, the city of Los Angeles, and Unincorporated cities in Los Angeles have local rent control laws.
What if I live in a city that already has rent control?
For the most part, the rules would not change. AB 1482 would not override local rent control laws. However, itwould cover units that are not already covered by local rent control laws.
For example, in the city of Los Angeles, the local rent control law only applies to buildings constructed before 1978. Several hundred thousand newer units that opened in the nearly three decades from 1978 to 2005 would be covered under AB 1482.
So, in the city of Los Angeles, if you live in a building that opened before 1978, your rent would be capped under the provisions of the city’s law. If you live in a building that opened after 1978 and is at least 15 years old, your rent would be capped at 5 percent, plus inflation.
What else is in the bill?
Equally as important as the rent cap, renter advocates say, is a provision that would require landlords to show “just cause”—such as failure to pay rent—when evicting tenants. That would end the ability that landlords have now, in most parts of the state, to evict tenants without giving an explicit reason.
For tenants who have lived at the property for at least one year, landlords would have to give the renter the opportunity to“cure” the violation.Other examples of just cause include violating the terms of a lease and committing a crime on the property.
If a landlord wants to convert the rentals to condos or “substantially” remodel the property, they would have to pay relocation fees equal to one month of rent.
These rules would not apply to cities with their own local just cause laws, includingSanta Monica and Glendale.