Market Update: Current Legislation That May Affect Real Estate Investors
Learn about the latest legislation changes and proposals regarding multifamily real estate investing.
At Alden Pacific Investments we want to keep our clients and community informed of any potential developments that could affect real estate investors. Below is a breakdown of proposed federal, state, and local legislation that could potentially impact investors in the near future.
Presidential candidate, Joe Biden, has put forth a plan to disallow certain investors’ ability to 1031 Exchange in order to fund a 10-year, $775b economic plan. Biden has proposed to do away with 1031 exchanges for those making over $400k per year.
Prop 21- Rental Affordability Act Currently, California rent control is governed by a law known as Costa Hawkins. The Rental Affordability Act seeks to overturn or modify three key components of Costa Hawkins.
Three primary tenets of Costa Hawkins that would be overturned by the Rental Affordability Act are below:
Disallows any rent control on a building built after 1995, or after the year a city enacted rent control (whichever was earlier)
Disallows rent control for single-family homes and condos
Disallows vacancy control (if a tenant leaves the owner has the right to charge market rents for their units)
The Rental Affordability Act would seek to change these three components in the following ways:
New buildings would be exempt for 15 years.
Houses and condos would be exempt only if the owner is an individual that owns 1 or 2 homes.
Vacancy control would be limited. Owners would only be allowed a 15% rent increase when the original tenant moves out (up to once every 3 years).
Prop 15 - The repeal of Proposition 13 Proposition 15 would create a split-roll tax ballot measure for California commercial and industrial property owners. The final language in the bill states that commercial and industrial properties would have their property taxes reassessed if the property’s assessed value is over $3 million dollars OR if the owner owns multiple properties that have a total combined assessed value of $3 million dollars.
Eviction Moratorium as of July 21, 2020
Eviction Moratorium in LA has been extended to September 30th, 2020 & may be extended by the Board monthly
The moratorium is not a waiver of rent. The residential or commercial tenants (with 9 or fewer employees) will have up to 12 months following the end of the Moratorium period to repay any past due payments.
Commercial tenants with more than 10 but less than 100 employees will have up to 6 months to repay past due payments - unless they have made prior arrangements with the property owner
With so many potential changes on the horizon, we are happy to help answer any strategy questions to help insulate investors from any future volatility within their portfolios. Please do not hesitate to reach out to schedule a call or virtual meeting to discuss in more detail.
Tel: 310 387 3489