GOVERNOR SIGNS AB 1482, ENACTS STATEWIDE RENT CAP

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See CAA’s guidelines to comply with law

Gov. Gavin Newsom on Tuesday signed Assembly Bill 1482, landmark legislation that will place an annual cap on rent increases and create new standards for evictions across California.

The signing of AB 1482, officially the Tenant Protection Act of 2019, marks the most significant policy change for California’s rental housing owners and tenants in a quarter century.

The bill, which comes from Assemblyman David Chiu, D-San Francisco, will limit annual rent increases at 5% plus the rate of inflation — which at present comes to about 8% — for much of the state’s multifamily housing stock. The bill also will apply “just cause” eviction policies to qualified housing across California.

When the law takes effect Jan. 1, California will become the second state in the nation to pass a statewide rent cap. Oregon passed a similar law earlier this year.

AB 1482 will remain in effect until 2030 and will affect an estimated 2.4 million apartments.

Gov. Gavin Newsom

It accounts for the most sweeping policy change California’s rental housing industry since 1995, when the Costa-Hawkins Rental Housing Act stopped cities and counties from imposing extreme forms of rent control at the local level.  

With AB 1482 on the books, rent control in California will come in two flavors – the statewide rent cap under AB 1482, and locally administered rent control laws regulated under Costa-Hawkins.

For the most part, AB 1482’s rent cap will affect properties that are 15 years of age or older, contain two units or more, and are not already subject to local rent control ordinances under Costa-Hawkins.

AB 1482 will exempt single-family homes, townhouses and condos, except when owned by corporations or Real Estate Investment Trusts. It also will exempt duplexes when one unit is occupied by the owner.

Local rent control laws will carry on as usual, without interference from AB 1482, and Costa-Hawkins will continue to limit their application to apartments built before 1995 or an earlier date in some cities.

In such jurisdictions, AB 1482 will apply only to housing that both qualifies for the statewide rent cap and has been excluded from local rent control under Costa-Hawkins.

In San Francisco, for example, the city’s rent control ordinance will continue to cover multifamily housing built before June 1979, a date regulated under Costa-Hawkins. Apartments and corporate owned single-family homes built between June 1979 and 2005 will fall under AB 1482’s rent cap. Apartments and corporate owned single-family homes built after 2005 will have no rent cap until they turn 15 years old and qualify for AB 1482.

The California Apartment Association negotiated for a number of amendments to make AB 1482 less problematic to the industry. Amendments include:

Housing exempted for 15 years: Thanks to a CAA amendment, housing will be exempt from the bill’s rent cap and “just cause” eviction provisions until they are 15 years old. The bill previously was set to exempt buildings for only 10 years. With the longer exemption, CAA has helped to mitigate the bill’s impact on future development of rental housing.

Cities can’t lower AB 1482’s cap: CAA ensured that local governments cannot lower AB 1482’s rent cap, 5% plus CPI, for housing covered by the state legislation. Note, however, that AB 1482 does not apply to housing regulated by local rent control ordinances and the Costa-Hawkins Rental Housing Act. Cities and counties can continue to pass local rent control laws under Costa-Hawkins and set rent caps at any level they choose; they just cannot touch the rent cap and buildings that fall under AB 1482.   

Vacancy decontrol strengthened: When a tenant moves out of a unit regulated by AB 1482, the owner will be allowed to adjust the new rent to market and then resume conforming to CPI plus 5%.

“Just cause” provisions improved: Under AB 1482, owners would still be able to evict tenants for: 

  • 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 of the lease
  • Assigning or subletting
  • Refusal to allow the owner to enter the unit
  • The owner moving themselves or family into a unit
  • To substantially renovate
  • To go out of business altogether.

The just-cause provisions will kick in after 12 months of the tenancy, however, if the renter takes a roommate within the first 24 months, the clock will reset. Just cause then will not apply until all renters in the unit have been in place for a full year or at least one tenant has continually occupied the unit for 24 months or more. The just-cause provisions would apply to all housing covered by AB 1482.

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