Over the last year, California had made strides in renter protections, specifically potential rent control policies that would combat the homelessness crisis taking over the state. In May, Senate dismissed many of the plans and will repeal those that survived on January 1, 2023. Until then, here are the new rent control laws in California that will take effect and what their implications will be for both landlords and tenants.
Just Cause Rather Than Just Because
One of the remaining bills applies to eviction reasoning. California landlords are being held more accountable, as many tenants are being forced out of their homes. L.A. Mag cites that these types of “predatory evictions” are primarily responsible for the displacement of low-income families, and landlords will be made to provide “just cause” that meets California state standards. This will include illegal tenant conduct or other severe lease violations as outlined by the new law.
Even if a tenant violates their lease agreement, such as with an inability to make rent payments, the tenant has to be given due time to fix the situation after sufficient notice. In other words, evictions can never be an immediate result of renter behavior, and can’t continue if the renter resolves the landlord’s initial complaint within a legal timeframe.
Restrictions on Raising Rent
Part of the surviving California housing legislation includes a movement to place restrictions on rent costs, which would keep landlords from enforcing rent hikes that exceed a total of 10 percent. This would consist of a seven percent rent increase with room for inflation. More than 15% of rent increases in the state last year were above this figure. The original goal was to place a price ceiling at 5 percent, but the California Association of Realtors were able to convince lawmakers to adjust the cap in final agreements.
The bill will cover single-family homes and apartments in areas where there has previously been no rent control law. Areas with existing rent restrictions (i.e., local ordinances with stricter caps) will only see the regulations applying to buildings built after 1995. Human rights activists consider this a win, as these buildings were previously exempt from rent control policies.
Some homes, such as those built within the last ten years or those owned by a landlord with fewer than ten properties, will still be exempt. Santa Monica, West Hollywood, and Los Angeles are also unaffected by California’s new housing policies.
Dissenting Opinions
Real estate lobbyists claim that these rent control policies will discourage new home development, as potential home investors could balk at the limited potential for a cash return. The rent control lobbyists cite that the likelihood of a pause on home construction will exacerbate the affordable housing crisis rather than slow the rates of homelessness.
Legislators attempted to frame the bill as a morality issue, pointing to the price gouging that occurred in the wake of wildfires last year as a reason for renter protections. Many, especially tenant organizations, fear that the amendments made to the bill aren’t strong enough to have a real impact on vulnerable renters. Others worry that the 10 percent “cap” will be seen as landlords’ new minimum, encouraging them to simply charge the most they can whenever they can (once a year). The new bills, they say, could increase the tenants’ cost burden.
The shorter expiration for the policies allows a chance for the bills to play out and allow lawmakers to revise down the road. In the meantime, property owners will need to pay attention to further rent control laws in California that could affect their home’s rental policies and market rate.
As laws change to protect renters and California’s economy overall, a property manager like RPM Fairmate can keep you abreast of changing real estate laws.
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