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June 16, 2024
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California Could See Statewide Multifamily Rent Control by Next Year if Proposed Bill Passes


By: Kalah Espinoza
Vice President
Capital Markets | Multifamily
Colliers International

Assembly Bill 1482 cleared another hurdle this month as it passed 6-1 in the first state senate committee on July 9th. Here is what you need to know about the bill that may impose statewide rent control on California property owners as early as January 2020.

Assembly Bill 1482 proposes a limit on the maximum increase in rental rates on all multifamily rental units in California. The bill, co-sponsored by David Chiu of San Francisco, Tim Grayson of Concord and Rob Bonta of Alameda, limits rental increases in California to 7% plus CPI (which historically has averaged approximately 2.5% in California), the total of which is not to exceed a 10% maximum increase in rent. The bill was amended in the State Assembly such that it would cease to have effect after three years, with an option to renew. Multifamily developments that are less than 10 years old and property owners with fewer than 10 single-family homes would still be exempt from this limit on rental increases.

In the recent Senate committee hearing, AB 1482 was amended to include “just cause” eviction restrictions that were originally presented in companion measure AB 1481. The bill as amended requires property owners to provide just-cause in writing for tenant evictions if a tenant has occupied a unit for 12 months or longer. The measure provides renters the opportunity to address problems leading to their eviction prior to their removal. In the case of a no fault just-cause eviction, such as an owner move in or unit remodel, the landlord would be required to provide relocation assistance.

The bill will now move to the senate appropriations committee for further vetting, with a final vote of the full Senate required to move the bill to Gov. Gavin Newsom’s desk for ratification into law.

The Return of Prop 10

The repeal of Costa Hawkins has returned with a new name – the “Rental Affordability Act” aims to overturn broad, statewide limits on rent control – limits which prohibit the establishment of rent control over single family homes, condos and newly constructed apartment units. The same advocacy group, Housing is a Human Right, who previously sponsored Proposition 10 (which failed by a vote of 60/40 in 2018) is responsible for the “Rental Affordability Act”. The revised initiative would allow cities and counties to have unrestricted abilities to enact rent control measures within their jurisdiction on properties over 15 years past certificate of occupancy.

The “Rental Affordability Act” would extend rights to cities and counties to enact vacancy control – meaning that property owners might not be allowed to raise rents to market, even in the case of a voluntary move out. Under this measure, property owners would be restricted to increasing rents at vacancy to no more than 15% total over the entirety of the subsequent three years in addition to any supplementary local restrictions or laws. There is an exemption for property owners with two or fewer homes.

Sponsors of the initiative are in the process of gathering signatures to qualify the measure for the November 2020 ballot.

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