California recently became the second state to enact rent control in the face of the COVID-19 pandemic. They have now joined Oregon as the two states to put laws in place protecting renters. This is in addition to California’s Tenant Protection Act of 2019.
Key Impacts of the California Tenant Protection Act of 2020
- The TPA took effect on January 1, 2020, and caps annual rent increases at 5% plus inflation on 15+ year-old properties.
- The law is estimated to affect 8 million of the state’s 17 million renters.
- If housing is covered by the new law, a landlord can only raise your rent: 5% + Annual increase in inflation or 10%, whichever is less.
We are very fortunate because part of our due diligence and pro forma is to calculate the most favorable rental amount for the area, for our high-end clientele and for our investor partners. We aren’t in the business of dangling a low-ball price to get a tenant through the door only to blindside them with a 50% rent increase at the end of their first term.
We believe in respect for our partners and our residents equally, and we support California in its attempt to smoke out the other types of investment firms that only think about what’s good for themselves.