Rent Control - What You Need to Know About California's New Rent Cap Law

With everything going on in the world lately, it’s almost old news that California has a new rent control law in effect.

But, it’s an important piece of information for San Jose landlords, especially as eviction moratoriums are lifted and things start to get back to normal after the COVID-19 pandemic. This statewide rent control law is called the Tenant Protection Act or AB1482.

This new ordinance touches on things outside of rent control, and includes new regulations on evictions and Section 8 tenants as well. You have to be in compliance, even as rental property owners and landlords throughout San Jose and California struggle to figure out what this really means for their particular properties.

San Jose Rental Increases

With the implementation of AB1482, landlords in California are required to restrict their annual rental increases to five percent plus whatever the Consumer Price Index (CPI) determines to be the inflation increase.

Generally, it means you won’t be able to raise your rent more than seven or eight percent every year. This law is in effect for 10 years.

Any local San Jose rent control regulations will take precedence over the statewide law. San Jose has had rent stabilization in place that predates this statewide law, but if your property was exempt from the local rent control requirements but can be included in the statewide law, then it falls under AB1482. Even if you didn’t have to worry about San Jose rent control previously, you must now follow the state law.

San Jose Rent Control Exclusions

Your rental property may be exempt from the rent control laws if you meet one of these conditions:

  • Your property is newer than 15 years old. If you received a certificate of occupancy in the last 15 years, you’re exempt for now. A rental home that’s 12 years old is not covered by rent control laws now, but will be in three years. It applies to properties that are 15 years old or older.
  • You’re renting out a single-family home or a condo and you’re not a REIT, corporate entity, or an LLC with one member being a corporation. Individuals renting out a single-family property are exempt from rent control laws.
  • You’re renting out a duplex and you live in one of the units as your primary residence.
  • Owners of mobile homes who are renting out their property.

There are additional exemptions that include properties like dormitories and hospitals, but it’s unlikely you’re investing in those particular assets.

Just Cause Evictions in San Jose

Just Cause Evictions in San JoseThe state law also addresses evictions and the requirements that landlords and property owners must meet to evict someone. If it’s a just-cause eviction, meaning the tenants have violated the lease in some way by damaging the property, not paying rent, or engaging in criminal activities while inside the home, you can evict your residents the same way you normally would. We recommend getting legal or property management advice just to make sure you’re compliant.

If you’re evicting a tenant due to no fault of theirs, you may have to pay a relocation fee that is equal to a full month’s rent. For example, if you want to take possession of the property back so you can do some major renovations or move into it yourself, the tenants currently living there are entitled to a month of rent.

We know that staying on top of the laws and requirements is difficult, particularly in California and especially now. We’re here to help. Contact our team at Real Estate Connections, and we’ll make sure you’re kept in compliance.