The regulatory environment for California Multifamily Owners continues to remain onerous for landlords. Below is an update on various laws and regulations that will impact multifamily properties both in the city of Los Angeles and across the state of California.
The Update:
- Security Deposits Limited to 1 Month: Renters in California can no longer be asked for a security deposit larger than one month’s rent for leases signed on or after July 1, 2024 thanks to AB-12. Already existing leases will not be affected by this new law. There is an exception in the bill for small landlords, who can charge up to the value of two months’ rent, if the owner is a natural person (or LLC consisting only of natural persons) and they own a max of two rental dwellings that contain no more than a total of 4 units.
- Tenant Background Checks May Be Outlawed in Los Angeles: A proposed LA City ordinance would prohibit landlords from inquiring about an applicant’s criminal history or requiring an applicant to disclose criminal history when an applicant is applying for an apartment or other types of housing. Additionally, the proposed city law would prevent landlords from using such information, if received, to outright deny an applicant – and would impose fines on landlords for discriminating based on a tenant’s record.
- Mandatory Air Conditioning for Tenants: LA County Supervisors Lindsey Horvath and Hilda Solis are seeking to establish a legal maximum indoor temperature for rental housing. No firm limit has been decided upon yet and with plans still in early stages, it is not yet clear what exact cooling devices would be required when temperatures rise above the max.
- Mandatory Acceptance of Household Pets: AB 2216 is still making its way through the California Legislature. The bill will require landlords to have reasonable justification(s) for not allowing a pet in a rental unit and only allows landlords to ask about pet ownership after a tenant’s application has been approved.
- The Justice for Renters Act: This is the big one which will be on California ballots in November. The Justice for Renters Act aims to repeal the Costa-Hawkins Act of 1995, which would enable local governments to impose rent control on single-family homes and newer apartments. It would also eliminate the state’s ban on vacancy control, which would allow cities and counties to regulate rents in between tenancies.
- Updates to Measure ULA (aka The Mansion Tax): There have been updates made to the Mansion Tax since the tax took effect last year. The City has increased thresholds effective for LA City real estate transactions closing after June 30, 2024. The new thresholds for the Mansion Tax will be $5,150,000 and $10,300,000 (which is up from $5M and $10M respectively). This means that transactions above $5,150,000 but under $10,300,000 will be assessed a 4% tax. Transactions $10,300,000 and up will be assessed a 5.5% tax.
