Under a new California law, landlords who own certain government-subsidized properties must give tenants the option of having their rental payments reported to a major credit bureau.

SB 1157 by Sen. Steven Bradford, D-Gardena, is intended to help low-income tenants enhance their credit scores by incorporating on-time rental payment records into their credit histories. This type of reporting rarely happens at present.

“This bill, the first of its kind in the nation, starts to correct the longstanding inequity where those with the least resources have to fight the hardest to establish and improve their credit scores,” Bradford said in this press release. “Having a good credit score is the first step in helping renters achieve the American dream of homeownership.”

The law will take effect July 1, 2021, and apply to rental housing developments with five or more units that receive certain types of government assistance. Simply renting to a tenant who uses a tenant-based Section 8 Housing Choice Voucher will not make the landlord subject to SB 1157. However, if the property receives other forms of subsidy, such as a low-income housing tax credit, the new law may apply.

Landlords will be allowed to charge the tenant a fee to cover the cost of providing the service.

For more information on SB 1157, see CAA’s newly published Industry Insight paper, which covers:

• How affected landlords must offer to report rent payments and how often. 
• What happens if a renter wants to stop sharing his or her payment history.
• Options for reporting rental payments, such as through a third-party service, and sharing the cost with the tenant. 
• Certain exemptions from the reporting requirement based on property size.