Why Property Owners Should Pay Attention to AB 1157

California lawmakers are considering AB 1157, a bill that could significantly alter the rental housing landscape for years to come. If passed, it would impose new limitations on how rental properties are managed, how much rents can increase, and which properties are exempt from regulation.

This proposed legislation includes:

• A permanent cap on rent increases at 2 percent plus inflation (currently 5 percent plus inflation)

• Elimination of exemptions for single-family homes and condominiums

• Stricter rules on eviction notices, lease compliance, and tenant protections

For rental housing providers, this would represent one of the most restrictive rent control frameworks in California history.

Who Will Be Impacted

AB 1157 is not limited to large apartment operators. It affects nearly every type of rental property owner, including:

• Single-family home owners who were previously exempt from rent control

• Small multifamily owners in areas like Long Beach and Rancho Palos Verdes

• Institutional investors reviewing long-term performance models

• Property managers responsible for lease compliance and client guidance

If you own or manage rental property anywhere in California, this legislation requires your attention.

Rent Growth at Risk

To understand the impact of a 2 percent cap, we ran a scenario based on the average California rent for a one-bedroom unit, which is currently $1,637.

Under a 5 percent cap, this unit would grow to approximately $2,089 by 2030. Under AB 1157’s 2 percent cap, the same unit would reach only $1,807. That is a difference of $282 per year per unit.

For owners with multiple doors, this difference multiplies quickly and has a material impact on property values and cash flow.

Compliance Pressure Will Increase

Stricter compliance rules require tighter operational discipline. Here’s what owners and managers will need to adjust:

• Lease renewal processes must meet higher documentation standards

• Rent increase notices will need to comply with stricter timelines

• Eviction processes will become more regulated, increasing legal exposure

For self-managed owners, these changes increase administrative risk. For those working with a property management company, it is critical to ensure your provider has the systems and staff to stay compliant.

Our Recommended Action Plan

At Coastline Equity, we have created a readiness checklist for our clients:

• Run financial models using a 2 percent rent cap scenario

• Identify all properties currently exempt from AB 1482

• Update lease templates and resident communications

• Proactively inform tenants and investors

• Monitor the status of AB 1157 through legislative updates

Early action reduces risk and protects portfolio performance.

What This Means for Long-Term Strategy

This is a strategic moment for rental housing providers. Some may choose to exit the market. Others will adapt their models, tighten their operations, and pursue long-term growth in spite of new limitations.

What matters most is preparation. At Coastline Equity, we operate using our PME (Property Management Excellence) system to help clients remain agile, compliant, and informed—no matter what legislation is passed.

Talk to a Local Expert

We manage properties throughout Southern California, including Long Beach, Hacienda Heights, and Rancho Palos Verdes. If you need support adjusting to AB 1157, or simply want a second opinion on your leases or financial model, we are here to help.

Contact Coastline Equity Property Management to schedule a consultation.