Sacramento Report
The ABCs of AB 1482
written by Debra L. Carlton
Assembly Bill 1482—a statewide rent cap and “just cause” eviction bill—will become law on the first of the year.
Astatewide rent cap and “just cause” eviction bill (AB 1482) has been signed by Governor Gavin Newsom, a few weeks after it passed both houses of the state legislature. The law will take effect on January 1, 2020.
The bill will cap annual rent increases at 5% plus the rate of inflation—which comes to about 8% at present—for much of the state’s multifamily housing stock. The bill will also apply “just cause” eviction policies to qualified housing across California.
For the most part, the bill’s rent cap will affect properties that are 15 years of age or older, that contain two units or more, and that are not already subject to local rent control ordinances. The legislation will exempt single-family homes, townhouses and condos—except when owned by corporations or real estate investment trusts.
The legislation will take effect in January 2020 and sunset in 2030. California has become the second state in the nation to pass a statewide rent cap. Oregon passed a similar law earlier this year.
California’s legislation will affect 2.4 million apartments, estimates the Terner Center for Housing Innovation at the University of California, Berkeley. The legislation, however, will not interfere with local rent control laws, which remain under the purview of the Costa-Hawkins Rental Housing Act. This law generally limits local rent control ordinances to apartments built before 1995 or an earlier date in some cities.
In jurisdictions with their own rent caps—such as San Francisco, San Jose and Los Angeles—AB 1482 would apply only to housing that both qualifies for the bill’s rent cap and is exempted 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 and just cause eviction provisions. Apartments and corporate owned single-family homes built after 2005 would have no rent cap until they turn 15 years old and fall under the provisions of AB 1482.
The California Apartment Association secured amendments to the bill. These amendments include:
- Housing exempted for 15 years:
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.
- AB 1482 “occupies the field”: CAA ensured that AB 1482, which will cap annual rent increases at 5% plus CPI (currently, this would mean a maximum annual rent increase of approximately 8% in many communities), will “occupy the field,” meaning local governments will not be allowed to impose stricter rent caps on housing regulated by the legislation. Note, AB 1482 does not apply to housing regulated by local rent control ordinances under the Costa-Hawkins Rental Housing Act.
- 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 must then limit future rent increases to CPI plus 5%.
- “Just cause” provisions improved: Under AB 1482, owners will 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 a family into a unit; to renovate; to go out of business.
- 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.
Debra Carlton is the Senior Vice President Public Affairs at the California Apartment Association.