The office of California’s Governor Newsom had a busy 2023, signing 56 housing bills into law! Coming into effect across 2024, a few of these bills have a noteworthy impact on owners of rental homes in California.
In this article, we’ll dive into 5 changes that Californian landlords should know in 2024. But first, here’s a quick summary of things that a landlord can’t do in California:
At a glance: What a landlord cannot do in California in 2024
- The Tenant Protection Act caps rent increases for most residential tenants in California. Landlords can’t raise rent more than 10% total or 5% + CPI increase (whichever is lower) over a 12-month period.
- No-fault evictions are prohibited, so landlords can’t evict a tenant without cause.
- If a landlord ends a tenancy agreement to move back into the home, it can’t be put back on the rental market within 12 months.
- Landlords can’t end a tenancy to remodel the rental property without supplying details of planned works.
- Landlords in California can’t charge more than one month’s rent for a security deposit. On vacating, you can’t hold a security deposit for more than 21 days or deduct any costs for wear and tear. An itemized list of deductions must be supported by receipts or evidence of costs for repairs and cleaning.
- Landlords in California can’t discriminate against an applicant based on their credit history if they receive a government rental subsidy.
- Landlords can’t charge more than $62.02 in tenant application fees in 2024 (this is adjusted yearly).
- Landlords can’t neglect maintenance or repairs, especially if it affects a tenant’s health or safety. Tenants are allowed to use a “repair and deduct remedy” in California, making emergency repairs and deducting the costs from the rent if a landlord fails to address the problem.
City-based ordinances and state laws override any lease agreements, so you can’t avoid any tenant-protections with a clause in your lease. It’s also important to check the rules at a local level, as they may include further tenant protections than those outlined above. What’s true in San Diego may not apply in San Francisco.
5 changes to California tenancy laws that landlords should know about in 2024
1. Changes to no-fault eviction rules for owner move-ins and remodels
Legislation: Senate Bill 567
In effect as of: 1 April, 2024
The California Tenant Protection Act of 2019 has been amended, altering existing rules around “no fault” evictions or termination of a residential lease agreement. As of April 2024, more details are needed if a homeowner wants to end a tenancy due to moving-in or undergoing a major remodel of the property.
If you wish to reoccupy a rental home as an owner-occupier:
- You must move in within 90 days of your residents moving out
- You need to remain in the home for at least 12 months before the home can go back on the rental market
- The same rules apply to close family members (e.g. spouse, parents, children, grandchildren). Their name/s and your relationship will need to be disclosed in the termination notice.
- If you or family already occupies a rental unit on the property, or if there is a similar unit available on the property, you may not use moving in as grounds for termination of a lease.
If you plan to remodel a rental home:
- Owners of the rental home must now provide more details of the planned work, such as providing existing residents with copies of permits or signed contracts for the planned works.
- If the work isn’t carried out, you will legally be required to contact the former tenants and give them the opportunity to move back in (make sure you get a forwarding address if you plan to remodel your rental home!)
Read More: Understanding the California Eviction Process: A Guide for Homeowners
2. Security deposits are capped at one month’s rent
Legislation: Assembly Bill 12
In effect as of: July 1, 2024
As of July 2024, security bonds are capped at an amount equal to one month’s rent. Previous laws allowed up to three months rent to be collected in bond, on top of the standard first month paid before occupancy. With rents skyrocketing across the states, move-in costs were becoming unaffordable for renters, especially for furnished properties. Going forward, if you charge a monthly rent of $2,500 p/m, the move in cost will be capped at $5,000 inclusive of security deposit and first month rent. This cap applies to both furnished and unfurnished homes.
But, it should be noted that there is an exception for some individual homeowners. If you only own 1-2 rental homes, you may qualify as a “small landlord”. In this case, you may receive a security deposit equal to or less than two months’ rent. It’s important to check the fine print or speak with a professional before proceeding here as there are rules and exceptions. For example, the small landlord exception doesn’t apply if your prospective resident is a service member.
What happens if I hold a security deposit over one months’ rent?
Don’t stress, there’s no need to return the difference. If you (or your property manager) collected a larger security deposit prior to July 1, 2024, you may hold on to this amount even if it exceeds the new caps. Just be sure to check the rules around returning the amount when it’s time for your resident to move out.
Pro Tip: Take the hassle out of collecting rent and security deposits by letting Belong take care of it (and everything else!). With guaranteed rent and the easy option for residents to pay their security bond in installments, find out why homeowners are ditching outdated property management in Los Angeles, San Diego, San Francisco, and Sacramento to Belong instead.
3. Homeowners are better protected from illegal occupancy
Legislation: Senate Bill 602
In effect as of: January 1, 2024
Trespassing and ‘squatting’ can be a real concern to homeowners with vacant properties. But new laws allow a homeowner to alert local law enforcement that their property is uninhabited, allowing law enforcement officials to remove any trespasser who attempts to take up residence or claims to be a legal occupant. Previously a trespass notice was only valid for a period of 30 days. The amendment to SB 602 extends trespass letter validity to a full 12 months and it can be submitted electronically (if your local jurisdiction allows). When a valid letter is on file, homeowners won’t need to go to court to evict anyone living illegally on their property.
Pro Tip: When it comes to vacant homes, prevention is often better than the cure! Read
4. New screening laws block credit history discrimination
Legislation: Senate Bill 267
In effect as of: January 1, 2024
If you manage your own tenant screening, make sure you update your process for 2024.
If an applicant is receiving a government rental subsidy, you need to revise how you consider their credit history and application to rent your home. To avoid discrimination, amendments to SB 267 prohibits landlords from using a person’s credit history unless they are given the option to provide alternative evidence of their ability to pay their portion of the rent. This could be benefit statements, pay records or bank statements. You must also give them a reasonable amount of time to provide this information and reasonably consider it instead of their credit history when deciding whether to offer them a lease agreement.
Read More: Understanding Fair Housing Laws When Renting Your Home
5. San Francisco introduced an “empty home” tax
Legislation: Proposition M
In effect as of: January 1, 2024
Bay Area property owners with at least three units that have been vacant for more than six months will be taxed $2,500 - $5,000 per empty unit as part of Proposition M. Penalties will increase yearly to up to $20,000. Money collected will be invested in subsidizing affordable housing in the city, including for people over the age of 60.
Individual homeowners, like those that Belong supports, are less likely to be impacted by the measures at this stage, with single-family homes and duplexes exempt. That said, it’s a timely reminder that many counties are actively taking steps to reduce empty homes while the homelessness crisis continues to bite and more families are priced out of home ownership.
It’s not uncommon for homeowners to sit on a vacant home for a variety of reasons. Some have inherited a family home and aren’t sure if they’re cut out for property management. Others move for work and plan to return to the home and feel unsure about renting the home out. If this is the case, Belong has a solution. We find people that will love and respect your home as much as you do, while also doing all the work to ensure it’s looked after and maintained. Learn more about Belong’s unique residential network and homeowner services here.
Belong guarantees rent and offers eviction assistance
Belong homeowners don’t have to worry about constantly changing regulations, as our team of experts do all the work for you and are available 24/7 to answer any questions.
Belong homeowners earn guaranteed rent, paid to them each month even when residents are late to pay. And, in the unlikely event that residents must be evicted, Belong assists with the process so homeowners are never left stuck in the confusing legal system on their own.
Interested in learning more about Belong services and availability in California? Check out one of our local pages below:
- Oakland Property Management
- San Francisco Property Management
- San Diego Property Management
- Los Angeles Property Management
- Concord Property Management
- Berkeley Property Management
- Orange County Property Management
- Sacramento Property Management
- Everywhere else!
Disclaimer: This article is not intended as legal advice. Your local city is the best place to find information on local ordinances that apply to you and your rental property. In an effort to flip outdated property management on its head, we prefer to use the terms ‘homeowner and resident’ over ‘landlord and tenant’. But as this article discusses legislation, we have stuck to the old monikers for clarity.
