Friday, September 6, 2019

City of Sacramento passed a rent control ordinance -- here are the basics...

The City of Sacramento passed a new rent control ordinance last month that will be rolling out very soon. I think there may be confusion among local landlords and tenants alike as this is implemented. This ONLY applies within the city limits of Sacramento, which is a very specific area...there are areas within the unincorporated county of Sacramento where the ordinance will not apply, and there are many residents of those areas who do not realize the difference between city and county jurisdiction. Here is a map of the affected areas:
I think confusion will be highest in areas with Sacramento addresses that are outside of the city limits. For example parts of town such as the Arden / Arcade areas, some parts of Natomas, areas near the Oak Park neighborhood, Rosemont, South Sacramento, Foothill Farms, etc all have Sacramento addresses but are actually located in the unincorporated county though are adjacent to the city limits. Those areas are not affected by this rent control ordinance.

If you have trouble sleeping, you can read the full text of the adopted ordinance here. Here are the highlights of the new ordinance that will be in effect in the coming week:

  • Allowable annual rent increase is set at 6% + CPI (inflation adjustment), hard cap not to exceed 10%
    • Base rent is set at what the landlord charged as of July 1, 2019
    • Only 1 rent increase allowed every 12 months
    • Single family homes are exempt
    • All units built after February 1, 1995 are exempt
  • Just cause for eviction. After 1 year of occupancy, owners may only terminate tenancy for cause (like failure to pay rent or illegal activity), OR may only terminate tenancy with 120-day notice for the following reasons:
    • To make substantial repairs (must offer tenant first right to return) 
    • Landlord or immediate family moves into the unit 
    • Landlord withdraws all of the units in the building from the rental market for at least one year.
The ordinance will sunset on December 31, 2024 unless extended.

For added fun, there is a statewide rent cap bill, AB1482, making its way through the legislature right now. It will be interesting to see if there is the political will to make rent control a statewide policy. We shall know on that one in the next month.

If you are thinking about selling a rental or investment property in the city limits of Sacramento that falls within the jurisdiction of these rent control ordinances, please reach out to me right away so we can strategize how to sell the property in compliance with the ordinance.

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