Let’s imagine you’re preparing to invest in a Pleasanton rental property. You’ll need to think about all the details that every investor in every part of the country has to think about: Will you earn enough rent? Will you find high quality residents willing to rent your home? How easy will it be to maintain?
In California, you have to consider another important question before you invest: Is my investment property covered by rent control laws or exempt from them?
It’s not as easy a question to answer as you might imagine. There are frequent changes in the law, and if you’re not working with a Pleasanton property manager, you might struggle to keep up with what’s required and what’s prohibited.
Tenant Protection Act of 2019 (i.e. Statewide Rent Control)
The Tenant Protection Act of 2019, which mandates rent control throughout the state of California, went into effect in 2020. There are a lot of nuances to this law, and if you’re renting out a house in Pleasanton, you’ll want to familiarize yourself with it, especially the exclusions.
What you need to know, especially before you begin to invest in California real estate, is this:
- When your property is subject to rent control, you cannot raise the rent more than once a year. When you do raise the rent, that increase cannot be more than five percent of the current rent, plus the cost of inflation, which is set by the local Consumer Price Index.
- The total amount of your increase cannot be more than 10 percent of the current rental amount.
Just cause eviction also became a legal reality with the passage of this law. It bifurcates the eviction process into:
- Evicting for cause. If a tenant does not pay rent or violates the lease agreement or is found to be conducting illegal activities at your property, you can take the legal steps necessary to evict.
- If you’re ending a tenancy through no fault of the tenant, you will have to pay a relocation fee that’s equal to one month’s rent. This scenario may occur if you’re moving back into the home yourself or you decide to sell the home.
Single-Family Rental Homes in Pleasanton and Your Lease Agreement
Many single-family homes in Pleasanton and throughout California are exempt from rent control, but ONLY if the Landlord includes the legally required language in the lease agreement.
As a Landlord claiming an exemption from the law because the property is a single-family home, you are required to provide a written notice to your tenant. For any tenancy that begins or is renewed on or after July 1, 2020, this notice must be provided in the lease agreement or lease renewal. If you fail to provide the required notice, then your single-family home or condominium is subject to rent control regulations.
Make sure you have the correct legal verbiage written into your lease that lets tenants know the rent control law does or does not apply to your property.
As you learn more about the rent control and just cause eviction laws, you’ll likely understand the importance of working with an experienced Pleasanton property manager. We can ensure you’re in compliance and help you stay up to date on all the changing rental laws in California. Contact us at Advantage Property Management Services.