If you own an investment property, here’s how California’s new rent control law affects you.
If you own an investment property or are thinking of purchasing one in the future, how does California’s new rent control law affect you? To answer that question, there are a few key details about this law you need to keep in mind.
First, it imposes a 5% maximum increase—plus the cost of inflation—to rent costs on an annual basis. In recent years, property owners were able to increase their rent cost anywhere from 5% to 7%.
Second, this law doesn’t impact mom-and-pop owners. In other words, if you’re an individual owner of a single-family residence that’s not held as an LLC or corporation, this limitation probably doesn’t apply to you. It’s more intended to control larger investment properties like apartment buildings.
“If a tenant’s lease term expires and they leave the property on their own accord, you still have the right to increase your rent.”
Also, this law doesn’t apply to properties built in the last 15 years, and it protects tenants from being pushed out by landlords in order to raise rent prices. However, if a tenant’s lease term expires and they leave the property on their own accord, you still have the right to increase your rent.
Lastly, this law was retroactive to the beginning of 2019, so if you’re thinking of jumping ahead of it and making some quick changes to your investment situation, chances are that won’t work out so well for you.
There are many other components to this bill, so if you have further questions about how it affects any future investment purchase or sale, don’t hesitate to reach out to me. I’d be happy to help you.