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Will rent control affect investments?

On Behalf of | Nov 7, 2019 | investment Partnerships

New rent control legislation in California may have an impact on your if you are a real estate investor. It is vital that you understand the implications of such legislation before you make any investment moves. Rent control is a response to the lack of affordable housing and rising rental costs in the state. It is mainly protection for renters, which can mean a negative impact for investors like you.

According to NuWire Investor, the main concern you have is the Tenant Protection Act of 2019. This law covers any property over 10 years old, with exceptions if you own less than 10 properties. This act limits your ability to raise rents over the 10-year period the act is in effect. It also places limits on your ability to evict tenants.

Eviction restrictions include not having the right to evict a tenant for a lease violation without giving the tenant a chance to remedy the situation, having to provide a written eviction notice for tenants of more than 12 months and a requirement to help with relocation costs or to pay one month’s rent and fulfill lease agreement for a no-fault termination of a lease. You also cannot evict based on immigration status.

As for rent increases, you will be unable to raise the rent by more than five percent. With inflation calculated in, the increase cannot be over 10%. You also cannot raise the rent more than twice in a 12-month time.

The act does include some provisions for a hardship increase that allow breaking of rules if you are struggling to make maintenance and other essential changes to the property. This information is for education and is not legal advice.