19 Nov Rent Cap
On January 1, 2020, California’s new rent cap law takes effect. This means, over the next decade, California will limit rent increases to 5% each year plus inflation (typically 2%-3%). Not only does AB-1482 limit rent increases, it will also require landlords to provide a legitimate reason (just cause) for evicting tenants and, in some circumstances, pay for tenants to relocate. In other words, it bans landlords from evicting people for no reason (meaning: a landlord cannot kick a tenant out just to raise the rent). And, if there is a legitimate reason (no-fault just cause), landlords must offer relocation assistance.
Although landlords in San Diego won’t have to worry about the rent cap law taking effect until January 1, the law will apply to rent increases that take place on or after March 15, 2019. To clarify, landlords cannot raise the rent just before the rent cap goes into place. While most of the attention is on California’s rent cap, the eviction protections are arguably the most controversial. With this in mind, here is what San Diego rental property owners need to know about California’s new rent cap.
Eviction in California Just Got Really Expensive
What use to be a common occurrence in California, will be rare occurrence again. That’s because with the new laws, eviction in California just got really expensive. In fact, the bill turns every eviction into a potential legal battle because tenants can dispute the circumstances. Which means the cost of eviction just went up, but it’s not even clear by how much! Consequently, it is going to be more expensive to evict a tenant in California than it ever has before.
What is Just Cause Eviction?
Under the new law, all applicable evictions must be based on “just cause” meaning the owner must have a just cause for the eviction (at-fault or no-fault). This applies to renters who have resided in the unit for 12 months or more. Under current law, landlords can terminate a tenancy for any reason or no reason at all. But, under the new “Just Cause” rule, landlords must list one of several reasons for why they want a tenant out, such as dealing drugs from the property or failure to pay rent. Property owners however, can still evict tenants for “substantial” renovations. But, they must pay a relocation fee equal to a month’s rent for tenants that need to leave.
Understanding At-Fault & No-Fault Just Causes
According to the California Rental Housing Association (2019), “At fault eviction causes are based on the actions or activities of the renter that fall within the scope of the permissible reasons under the law” (para. 9). “No fault eviction causes are when the eviction is not based on the actions of the renter, but rather due to the owner’s actions or the owner’s compliance with a government entity” (AB 1482 FAQ – California Rental Housing Association, 2019, para. 10).
No-Fault Just Causes = Paying Relocation Fees
When the termination of a tenancy is based on a no-fault just cause, the tenant is entitled to relocation assistance or a rent waiver. For a termination based on a no-fault just cause, a landlord is obligated to provide relocation assistance. This must be in the form of either, at the landlord’s election:
- A direct payment of one month’s rent
- Waiving the rent for the final month
Annual Rent Increase Limitations (Rent Cap)
Although the law will not cancel existing rent control, it will however, cap rent increases at 5% plus inflation for any building in San Diego built after 1978 (at least 15 years old). In other words, once the law goes into effect, landlords may raise the rent up to 5% plus the applicable Consumer Price Index (CPI) or 10%, whichever is lower.
For any San Diego rental property owner, rent cap is a word no one wants to hear. But, as of January 1, 2020, landlords will have to comply with AB 1482. An impending law meant to keep rent reasonable in San Diego County. If you are struggling to understand how this impacts your San Diego rentals. You may want to consider working with property management company in San Diego. Whether you are interested in changing property managers, or simply looking to hire a property management company for the first time, we can help. We take care of all types of residential rental properties including homes, condos, multiplexes such as duplexes and triplexes, and even small apartment buildings. Let us manage your rental properties, so you can enjoy your life! Call us today at (858) 576-2176. We will save you time, money, and the stress that comes along with managing your own rentals.