California’s rent control law, explained
Just under half of California’s 40 million residents are renters. Rents have risen steadily over the last 20 years, resulting in California’s cities becoming some of the most expensive in the country. Skyrocketing rents combined with dwindling middle-class jobs are driving low- and middle-earning Californians from the cities, or even out of the state entirely. The state is looking to new rent control legislation to stabilize its population and solve its housing crisis.
Table of contentsWhat is rent control?History of rent control in CaliforniaHow does rent control work in California under the new law?What buildings are covered under AB1482?Arguments for and against rent control
What is rent control?
Rent control is a broad term for legislation that limits rental rates in a city or state. Rent control laws vary by municipality, but they generally put a limit on annual rent increases and protect tenants from eviction without cause.
The aim of these policies is to maintain a base of affordable housing for low- and moderate-income tenants. Rent control is more common in cities where competition for limited housing stock raises market rate prices out of reach for these residents.
Select U.S. cities have rent control laws, including New York City and Washington, D.C., while many states ban rent control outright. In 2019, Oregon and California became the first states to pass statewide rent control laws.
History of rent control in California
Major California cities including San Francisco and Los Angeles have had local rent control laws since the late 1970s. These policies were enacted in response to inflation and lack of affordable rental housing. The laws vary by city, but are generally limited to regulating how much landlords can raise rent prices per year. In some places, the rent control laws only regulate evictions, but not rent hikes, or only apply to mobile homes.
In 1995, voters in California passed the Costa Hawkins Act, which pre-empted existing local rent control ordinances. Under Costa Hawkins, single family homes and condos are exempt from rent control, as are newly constructed apartment buildings. The act also bans vacancy control, which means that landlords can raise the rent to market rate after a tenant moves out. A 2018 ballot initiative called the Affordable Housing Act failed to repeal Costa Hawkins and it remains in effect.
The current housing crisis in California prompted lawmakers to propose a number of new bills strengthening rent control and eviction protection for the whole state (while still complying with Costa-Hawkins). One of these bills, AB 1482 or the California Tenant Protection Act, passed in 2019 and went into effect on January 1, 2020.
How does rent control work in California under the new law?
AB 1482 is a statewide act that has two main functions: it limits rent increases and removes the right of landlords to evict tenants without just cause.
Rent Increases: AB 1482 restricts the allowable annual rent increase to 5% plus a local cost-of-living adjustment of no more than 5%, for a maximum increase of 10%. The law is retroactive, calculating the starting rent from March of 2019. There is no maximum rent or limit on how much landlords can raise rents between one tenant and the next.
Eviction Protection: Landlords can only evict tenants for a number of legal reasons. This applies to tenants who have lived in the unit for more than one year.
“At fault” just causes for eviction include not paying rent, criminal activity in the rental unit, or breaching the lease contract. Landlords must give tenants a chance to fix lease violations.
“No fault” just causes for eviction include the owner moving into the unit, converting the apartment to a condo, or renovating or demolishing the unit. Landlords must offer the tenant a “relocation fee” equal to one month’s rent in these cases.
The act does not, however, enforce these rules. Tenants have to hire an attorney and sue their landlord if they believe their rights are being violated.
AB1482 will expire on January 1, 2030, unless legislators extend it.
What buildings are covered under AB1482?
The new law covers all multi-family rental units the state of California, with some exceptions.
New buildings are exempt until they reach 15 years old (in keeping with Costa Hawkins), so currently the law applies to buildings constructed before 2005. This is meant to encourage builders to build new rental housing without their income being limited by rent control, at least for the first 15 years.
Duplexes where one unit is occupied by the owner are exempt.
Single family homes and condos are not subject to rent control, unless they are owned by a corporation or real estate investment trust (REIT).
In cities that have established rent control laws, AB1482 applies only to buildings that are not already covered by stricter local laws. In San Francisco, for example, buildings from before 1979 would be subject to the San Francisco Rent Ordinance, and buildings constructed between 1979 and 2005 would be covered by AB1482.
Arguments for and against rent control
The arguments for rent control are straightforward: limiting the rate of increase for rents will keep housing affordable and reduce displacement. Rent control directly benefits those who are established in below-market rate housing.
Critics of rent control in California argue that the problem of high rents stems from restrictive zoning laws throughout the state that hinder new development. Construction of new housing units has not kept pace with job creation in California, leading to a limited supply that cannot match a huge amount of demand. Rent control laws exacerbate this problem, as they disincentivize construction of new rental units.
California’s new rent control law puts 2.4 million more units under regulation, for a total of about 8 million in the state. After the ten years that the act will last, politicians and economists may have a clearer picture of the long-term effects of this kind of rent regulation.
Rent controlled apartments are often hard to come by. Bungalow offers an alternative: affordable private rooms in shared homes that cost an average of 30% less than market-rate studio apartments in the same neighborhoods. Wifi, utilities, and monthly cleaning are set up before you move in, and all roommates are vetted, so that coliving is seamless. Find a Bungalow near you.
Ready to find your next home?
Move-in ready homes and a built-in community so you can feel at home, together — wherever you are.