The Importance of Understanding How State & Local Government Bills Affect the Rental Market - Article Banner

The rental market responds to economic forecasts, demographic trends, and even state and local laws. This is especially easy to see in 2020. In California, landlords and property managers were beginning to absorb the new statewide rent control laws, just cause eviction requirements, and other regulations that came with the 2019 Tenant Protection Act when the COVID-19 pandemic struck, bringing about a moratorium on evictions.

If things seem a bit chaotic and uncertain with your investment property in Merced County, San Joaquin County, or Stanislaus County, it’s partly due to the fact that landlords, owners, tenants, and courts are in the middle of serious changes. The government bills, executive orders, and new laws currently in place will certainly impact your rental value, your cash flow, your long term ROI and your investment goals.

California Eviction Bans During COVID

Just as it looked like California was going to begin recovering from its state of emergency and return to some version of normalcy, documented cases of the coronavirus began to spike again. This is happening throughout the U.S., and it’s making things more complicated for rental payments, lease enforcements, and evictions.

If you’ve had a tenant in place who hasn’t been paying rent due to a job loss, financial hardships brought on by the pandemic, or just because they’ve seized on an opportunity to avoid their obligations, you still won’t be able to remove them from your property for a while. Even as the courts begin to accept eviction filings, there’s going to be a backlog.

This will definitely continue to disrupt the rental market. Throughout Merced County and other local communities, landlords are left without the rent that they need, and they can’t replace their nonpaying tenants with residents who can pay. In San Joaquin County, eviction protections go even further. If a tenant can demonstrate that their inability to pay rent was caused by the pandemic, the eviction will be waived. Landlords may need to keep a tenant in place who hasn’t paid rent.

The best thing you can do is work with your tenants personally. Reach out to them and find out where they stand financially. If they haven’t been able to pay the full amount for a month or two, maybe they’re able to now. The market will require landlords to be creative and communicative thanks to the pandemic and the laws surrounding it.

Statewide Rent Control in California

The rent control laws that are now in place throughout the state also have an impact on the rental market in Stanislaus County and throughout all of California. Unless your property is exempt from this law, you cannot increase the rental rate over any 12-month period more than five percent plus the percentage change in the cost of living, or 10 percent, whichever is lower.

This law will affect the rental value of your property. It will also influence tenants as they’re looking for new homes to rent. Even if your property is exempt from rent control, it may still cost you well-qualified tenants who decide to rent homes with strict limits on rental increases.

California Just Cause Eviction Laws

The rental market will also adjust to the new eviction requirements. Before The Tenant Protection Act, you were not required to renew a lease with your tenant. But under the new state law, evictions are separated into just-cause terminations and no-fault lease terminations.

An at-fault lease termination or a just cause eviction would be due to nonpayment of rent or breach of the lease agreement. No-fault lease terminations occur when an owner wants to move back into the property or has plans to demolish the property and build something else. With the no-fault termination of a lease, you could be responsible for compensating that tenant for relocation expenses which equal the amount of one month’s rent.

legalThese are just a few of the state and local laws that are having an impact on the rental market in Merced County, San Joaquin County, Stanislaus County, and throughout California. The market also responds to security deposit requirements, stricter screening laws, and fair housing mandates.

We can tell you more about what this means for your rental property specifically. Contact us at New Bridge Management.