What You Need to Know About California Rent Control
There are many layers to California’s rent control, including state and local laws. The Tenant Protection Act of 2019 (Jan 1. 2020) set the limit to rent increases to 5% plus local inflation (CPI), up to a limit of 10%. Exemptions to this law include most condos and single family homes, duplexes where the owner lives in one of the units, and buildings constructed within the last 15 years.
The city of Los Angeles has had rent control laws going back to 1978, and more and more cities are enacting their own rent control. Recently, the Pasadena Rental Housing Board set a rent cap of a total of 75% of CPI which will go into effect October 2023.
Tip: if you have been thinking about buying an Air BnB as an investment, make sure you look up the local short-term rental ordinances in that city.
These Southern California cities have local rent control laws:
Los Angeles, Santa Monica, West Hollywood, Beverly Hills, Culver City, Inglewood, Pomona, Thousand Oaks, Glendale, Maywood, Palm Springs, and San Diego.
What does this mean for the real estate market?
Investors who buy property in rent-controlled areas have to budget for relocation expenses and limited rental increases until the tenant moves out. We may see investors moving their investments out of rent-controlled cities if the laws are too restrictive, possibly opening up opportunities (finally) for owner occupants to buy those properties. If your dream has always been homeownership, continue aggressively putting that money aside for a downpayment because we believe owning real estate is one of the best ways to build wealth.
Homeowners: Inventory is currently at an all-time low. If you have been thinking about selling, this is a great time to maximize your gains!
Are you thinking about making a move this year? Let us know how we can help you navigate the tricky market! Call/text: (626) 605-1840 or reply to this email!
The information above is for educational and informational purposes only. It is not a substitute for tax advice from a tax professional and we expressly recommend that you seek advice from a tax professional.
