From the American Apartment Owners Association:
Creating rent control for a state as vast as California is no easy task. While California voters said no to rent control last year, lawmakers didn’t give up, and the new legislation includes compromises on a few key issues. The rule, California Assembly Bill 1482, excludes cities that already have rent ordinances. That happens to include the two largest cities, San Francisco and Los Angeles.
In California, if a tenant has lived in a unit for 12 months, it becomes far more difficult to evict them and they can only be evicted if they:
- don’t pay rent,
- breach the lease in some other way,
- are involved in criminal activity on the property, or
- cause some other public nuisance.
Landlords can also evict if their immediate family will occupy the unit or if it’s being converted into a condominium. The landlord must pay the tenant’s relocation cost.
The legislation also doesn’t allow any California cities to create an annual rent control cap lower than 5% plus inflation. Single-family homes and condos are exempt from rent control, protecting smaller real estate investors. The California Apartment Association didn’t oppose the bill, but the California Association of Realtors issued a statement saying the new rules don’t do enough to increase the supply of affordable rental housing.
What landlords need to keep in mind
Even if rent control isn’t an issue in your community yet, it may be coming. For landlords, it’s always important to stay aware of what’s happening in your community. Pay attention to the local news where your rental is located and attend town meetings if possible. As a real estate investor, you can make your voice heard.
City and state legislation tends to focus on two core issues: the cost of rent and the process of eviction. As you determine your budget and the rent you need to charge, know that city or state regulations may limit your rents now or in the future by updating legislation.
As we’ve seen with the examples above, most laws and ordinances aren’t universal — there are generally different rules depending on the size and age of the building. Know where your property falls with regard to your local legislation.
Eviction is never an easy process, but most laws favor tenants. As a landlord, you’ll need to understand the process in your area before you need to go through it. Documentation of reasons for eviction is critical. Keep as many records as possible documenting the situation. While it’s impossible to predict the future, one way to lessen your chances of having to evict a tenant is through careful screening.
Individual real estate investors can be an important part of the affordable housing crisis and by staying aware they can protect both themselves and their tenants.
