New California Rent Cap May Change the Face of the Multifamily Industry

Marc Hartley, Principal
442.244.2426 |

California will soon become the third state in the country to implement a statewide rent cap. Governor Gavin Newsom enacted the California Tenant Protection Act of 2019 (AB1482), limiting apartment rent growth and capping rent increases at 5% after inflation for the next 10 years. The cap applies to properties older than 15 years of age and will take effect in January 2020 and sunset in 2030; however, it is retroactive to March 15, 2019. (Rent increases from March 15, 2019 through January 1, 2020 are subject to this new cap.)

Other key notes are as follows:

  • It applies to properties containing two or more units. (Exemptions: single-family homes, condos, townhomes, duplexes, and granny units if the owner occupies one of the units.)
  • Rent increases will be limited to 5% plus inflation or 10%. (Whichever is lower.)
  • This bill does not preempt any local rent-control ordinances.
  • Rents can be adjusted to market, when the unit is vacant and rented to a new tenant.
  • Landlords are required to have and state just cause for eviction of tenants who occupied the premises for a year. The following reasons for eviction can include:
  • Nonpayment of rent.
  • A breach of the material term of the lease.
  • Nuisance, waste, unlawful, or criminal activity.
  • Refusal to sign a written extension or renewal.
  • Assigning or subletting.
  • Refusal to allow the owner/manager to inspect the unit, with appropriate notice.
  • The owner moving themselves or family into the unit.
  • To renovate the property.
  • To go out of business altogether.

If the landlords evict a tenant to convert buildings to condos or make substantial renovations, they must pay for the relocation assistance equal to one month’s rent.