It has been a busy week for governments across the world, so you may have missed some rather important local news regarding a new law that implements rent control across California. This is not an area of expertise for either Craig or myself so we have brought in our good friend and fellow Brits in LA member Frank L’e Sanford to explain it to us all in laymen’s terms. As a realtor and conscientious landlord we thought it would be interesting for you all to hear how it affects us all from his professional perspective. If you have anything to contribute to this topic please drop us a line at info@Britsin.LA
Before I love you and leave you I want to let you know that we will be collecting donations for the Poppy Appeal benefiting the Royal British Legion. You can get your poppy from us every Tuesday up until November 5th, either at Breakfast Club or Pub Quiz – details can be found at www.Britsin.LA. You will be in good company, as only last week we had Formula One champion, Lewis Hamilton grace our presence at breakfast and he too, generously donated to the Poppy Appeal. His appearance certainly gave a whole new meaning to the phrase ‘Breakfast of Champions’!
Cheers!
Eileen
Now over to Frank…….
Hello, hello, hello:
California’s Governor Gavin Newsom recently signed Assembly Bill 1482 (AB1482) enacting rent control in California, which is designed to protect tenants from big rent increases and evictions. California has the second highest poverty rate in the nation, and as you’ve probably sadly noticed, a growing homeless population.
Once the law starts on January 1, 2020 they’ll start regulating how much Californians’ rent can increase each year, limiting it to 5%, plus inflation. (Did you kno, there’s less than 70 days left in this decade!)
The rules, however, will vary for Cities that already have rent control laws. The law will expire in 2030, unless lawmakers vote to extend it.
Here’s a breakdown of how the new AB1482 law will work:
Will my apartment be rent-controlled?
That depends on where you live. If it’s a City that does not already have a local rent control law, and your home is at least 15 years old, the answer is most likely “Yes.”
The law will exempt buildings built in the last 15 years. That’s a rolling date, meaning units built in 2006 will be covered in 2021, units built in 2007 will be covered in 2022, and so on.
What types of buildings will be covered, and which won’t?
Rent control will be applied mostly to apartments and smaller multi-family buildings, with some exceptions, along with some single-family homes.
Condos and single-family homes will be exempt, unless owned by a corporation or Real Estate Investment Trust (REIT), to help save the “mom-and-pop” landlords, like me.
Duplexes where the owner lives in one of the units, will also be exempt. This includes ADUs!
How much will my rent go up?
If you live in a city that does not already have a local rent control law, rent increases will be limited to 5%, plus local inflation, but would never exceed a total of 10%.
To help tenants whose landlords might have gone on a rent hiking binge in anticipation of AB1482 passing, the law will be retroactive to March 15, 2019. Whatever amount the tenant paid as of that date, is the amount that the increase will be based on.
How much is inflation?
The rate of inflation will be tied to the Consumer Price Index (CPI) in each metropolitan area. In Los Angeles County, it averaged 2.5% from 2001 to 2018.
Which Cities already have local rent control laws?
In Los Angeles County, the cities of (The People’s Republic of LOL) Santa Monica, West Hollywood, Beverly Hills, Culver City, Inglewood, City of Los Angeles, and unincorporated neighbourhoods of Los Angeles County, already have local rent control laws.
What if I live in a City that already has rent control?
The rules won’t change. AB1482 will not overrule local rent control laws. However, it will cover units that aren’t already covered by local rent control laws. For example, in the City of Los Angeles, the local rent control law only applies to buildings built before 1978. Several hundred thousand newer units that were built between 1978 and 2005 will now be covered under AB1482.
So, in the City of Los Angeles, if you live in a building that was built before 1978, your rent increase will already be capped under the City’s current rent control law, and it’s 4% this year. If you live in a building that built after 1978 and is at least 15 years old, your rent increase will be capped at 5%, plus inflation.
How much harder is it for a landlord to evict a tenant?
Equally important as the rent cap, is a provision that will require landlords to show “Just Cause”, like not paying rent, breach of lease, criminal activity, creating a nuisance, committing waste, refusal to execute a written extension or lease renewal, or refusal to allow the owner to enter, when they evict tenants. That’ll end the ability that landlords have now, in most parts of California, to evict tenants without giving a good reason.
For tenants who have lived in a property for at least 1 year, landlords will have to give the renter the opportunity to fix the violation, for example catching up on unpaid rent.
Landlords can also evict for “No Fault” reasons. For example, when the owner or their family plans to occupy the property, if they want to remove the property from the rental market, if they intend to substantially remodel the property, or if they are ordered to vacate it by a government agency or court.
AB1482 requires landlords to provide relocation assistance of 1 month’s rent for “No Fault” evictions, within 15 days of serving the eviction notice, and to tell tenants about the relocation assistance.
What’s L.A. City’s new ‘no-fault’ evictions Law?
This week Los Angeles Mayor Eric Garcetti signed a new law, that was approved 14-0 by L.A. City Council, to stop the big wave of eviction notices, now being served by landlords to evict tenants since AB1482 was signed, but before AB1482 goes into effect in the New Year. It would only affect people whose “no-fault” evictions, have yet to go into effect, but it won’t stop rent increases.
What are the exciting opportunities created by these new laws?
Many landlords will be scared off by these new rent control laws, so will want to sell their properties. This’ll be a huge opportunity for investors like myself, who have years of experience and know-how to run a rent control building profitably, to buy these properties.
Frank L’e Sanford
