How California’s New Rent Control Law Affects Multifamily Investors

Will new rent control laws impact California’s multifamily real estate investors?

In October of this year, California’s governor signed a new rent control bill into law.  The new law (which takes effect on January 1) will limit annual rent increases to 5% plus the rate of inflation.  According to calculations from the California Apartment Association, this amounts to a maximum annual rent increase of 8%.  However, industry experts point out that this law places rent increases within the market-wide average.  As such, commercial realty advisors predict that California’s new rent regulations (as they are currently written) will not have a major impact on most apartment properties.

That being said, investors in Los Angeles and San Francisco have already demanded higher cap rates out of fear that lawmakers will pass even stricter rent control laws.  In these high-ticket markets, many investors are frustrated by their inability to quickly raise rents at properties where rent is currently below market value.

Proponents of the law predict that California will not be the last state to pass rent stabilization legislation.  Oregon already passed a similar law earlier in the year, and many other states seem to be moving towards enacting rent stabilization measures.

This is what your commercial realty advisors have to report on California’s new rent control law.  Interested in staying up to date with the latest real estate news?  If so, then contact the experts at California Commercial Realty Advisors, Inc.  Our dedicated team is eager to assist you with all your real estate needs today.

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