Newly introduced legislation takes aim at both the Costa-Hawkins Rental Housing Act and corporate landlords by opening the door to local rent controls on single-family homes.
AB 1791 by Assemblyman Adrin Nazarian, D-North Hollywood, would authorize cities and counties to cap rent increases on single-family rentals, regardless of their age, if they are owned by corporations with 10 rental units or more and with a specified gross income.
At present, Costa-Hawkins protects both new housing – built after 1995 — and single-family homes from local rent control ordinances.
Nazarian’s bill strikes at both these protections. If AB 1791 becomes law, certain corporate owned single-family homes will be subject to local rent control ordinances before the first renters get their keys.
Clearly, AB 1791 is a bid to weaken Costa-Hawkins, the target of two failed statewide ballot initiatives (Props 10 and 21) in recent years, and to punish Real Estate Investment Trusts that own and manage single-family rentals built over the past decade.
The author also overlooks existing safeguards for single-family renters. Under the California Tenant Protection Act of 2019, passed as AB 1482, corporate owned single-family homes are subject to a statewide cap on rent increases, but not until they turn 15 years old. Allowing local rent controls on brand new single-family homes will discourage construction of this type of rental, particularly in cities and counties with harsh rent control policies.
The only positive aspect of Nazarian’s proposal is that it replaced the guts of another problematic bill. Until this week, AB 1791 proposed a $500 excise tax on all residential property, including rental units. This proposal is no more unless Nazarian inserts it into yet another piece of legislation.