Part 3: New California Housing Laws
As California cities consider local rent control measures and other mechanisms to address the impacts of escalating residential rents on local housing, the California legislature passed Assembly Bill 1482 as a statewide solution to this concern. Signed by Gov. Gavin Newsom Thursday, the bill, known as the Tenant Protection Act of 2019, limits landlords’ ability to increase residential rents and to remove residential tenants without just cause. This legislation could take some pressure off local governments to address rising rents through local enactments.
Limits on Residential Rent Increases
AB 1482 provides that, over the course of any 12-month period, a residential landlord cannot increase a tenant’s rent by 5 percent plus the percentage change in the cost of living (set by regional Consumer Price Index) or 10 percent, whichever is less. It applies to all rent increases after March 15, 2019.
The bill exempts certain housing types from the cap on rent increases, including:
- Housing constructed in the past 15 years,
- Affordable housing subject to a deed restriction, or agreement arising from subsidies for very low-, low- or moderate-income households,
- College dormitories,
- Single family homes or condominiums rented by the owner, unless owned by a real estate investment trust, corporation or a limited liability company in which at least one member is a corporation,
- Duplexes where the owner occupies one unit and rents the other, or
- Units that are already subject to local rent control measures.
The bill also prevents landlords from increasing a tenant’s rent more than twice over a 12 month period, except to set new rental rates at the start of a new tenancy.
Just Cause for Termination of Residential Tenancies
As with most rent control measures, AB 1482 also includes tenant protections in the form of a just cause showing for landlords wanting to terminate residential tenancies. These restrictions prevent landlords from simply evicting tenants to set new rents with their new tenants, thus avoiding the rent caps established by the new law. These just cause protections apply when all the tenants in a unit have occupied the unit for 12 months or more or some of the tenants have occupied the unit for less than 12 months, but at least one tenant has occupied the unit for 24 months or more.
The bill enumerates several “at fault” just causes for eviction, including failure to pay rent, material breach of the lease and criminal or nuisance activity. It also enumerates some “no fault” just causes, including removal of the unit from the rental market or providing it to an immediate relative, substantially remodeling the unit, vacating the unit to address habitability issues, or responding to an administrative or court order.
Similar to the rent cap, the bill exempts certain housing types from the tenant protections requiring a just cause showing prior to terminating a residential tenancy. These include:
- Housing constructed in the past 15 years,
- Affordable housing that is subject to a deed restriction, or agreement that provides subsidies for very low-, low- or moderate-income households,
- Dormitories for both colleges and K-12 schools,
- Housing associated with a nonprofit hospital, religious facility, extended care or licensed residential care facility,
- Individual rooms or accessory dwelling units rented out by the home owner,
- Single family homes or condominiums rented by the owner, unless they are owned by a real estate investment trust, corporation, or a limited liability company in which at least one member is a corporation or
- Duplexes where the owner occupies one unit and rents the other.
The new bill does not preempt existing local just cause eviction protection ordinances. Instead, it allows local jurisdictions to adopt more protective just cause ordinances.
The Legislature declares in AB 1482 that these restrictions are needed for a limited time to address the statewide housing crisis and, in particular, concerns with residential rent gouging. As a consequence, these protections will expire on Jan. 1, 2030.
With California's housing shortage reaching crisis levels, the state Legislature and Gov. Gavin Newsom approved a slew of new bills this session aimed at helping the situation. Using a mix of carrots and sticks, these laws will change how cities and counties address housing shortages in their own communities. Watch for more Legal Alerts analyzing the new laws and how they impact your agency.
Also in BB&K’s Housing Series:
Coming Up This Week:
- New laws related to accessory dwelling unit regulation
- A roundup of other new housing related laws