If you are a landlord in the State of California, then you need to know the new law that was just signed by Gov. Gavin Newsom that will go into affect on January 1, 2020. Assembly Bill 1482 states that landlords can only raise rent by 5% per year, plus cost of living up to a total of 10%, whichever is less. Some landlords may be thinking of raising rent this year more than the maximum allowance before the law goes into affect. However, keep in mind that the governor’s office thought you might do that, so the bill also states that any rent increases on or after March 15, 2019 count toward the maximum rental rate. If you do raise the rent this year beyond the maximum rate before January, you will be required to lower the rent on January 1st to meet the maximum requirement.
Is this bad news for landlords? It depends on how you look at it. Yes, you will not be able to raise the rent as you wish anymore and at the rate you might want to raise it. You might be tempted to second-guess whether or not you should buy or keep that investment property. However, if you have good tenants and want to keep them, you may not want to raise the rent that much every year anyway. Owning a property for rental income is a great investment! Even if the rent is not moving up as quickly as you would like, you are still gaining equity in the property.
The key to remember as a landlord is to make sure you have tenants that will take care of the property, pay rent on time and hopefully become long-term tenants.
Click Here for more information on this law. If you have more questions, please feel free to reach out to me. I cannot give legal advise, but can help you understand the implications that this will have on your real estate investments. For legal advice, please consult a trusted real estate attorney.
Have a great week!