LOS ANGELES, CA – In a state that never fails to push the boundaries of regulation, California’s AB 246 lands with a thud—a bold declaration of government intervention in one of the nation’s most complex housing markets.
The measure freezes rents in Los Angeles County at their January 7, 2025, levels, a response to the Palisades Fire and windstorm emergency declared earlier this year. For tenants, it offers the promise of stability amid the chaos. For landlords, it’s a legal straightjacket, tethering their income to a date etched in bureaucratic stone, regardless of rising costs or shifting market dynamics.
The law, which overrides existing statutes such as Penal Code §396, paints with a broad brush, affecting every residential property in the county. From single-family homes to newly constructed apartments, nothing escapes its grasp. And while it claims to safeguard tenants, AB 246 leaves landlords wondering whether their property rights are anything more than a historical artifact.
The Anatomy of AB 246
At its core, AB 246 imposes a simple but far-reaching mandate: rents in Los Angeles County may not exceed what was charged—or advertised—on January 7, 2025. This freeze will remain in effect until 12 months after the state of emergency ends, creating a long horizon of fixed rental income for property owners.
Unlike previous rent-control measures, AB 246 does not discriminate between properties traditionally subject to regulation and those typically exempt, such as single-family homes or units under Costa-Hawkins. The law casts its net over every residential property, regardless of ownership structure, size, or previous exemptions. For tenants, this is a windfall. For landlords, it’s a fiscal nightmare.
The law also effectively nullifies the flexibility offered by Penal Code §396, which ordinarily permits landlords to raise rents up to 10% during a declared emergency. Under AB 246, that option is no longer on the table in Los Angeles County.
A Gordian Knot of Legal Restrictions
Landlords now face a labyrinthine set of rules when determining how much rent they can legally charge, especially for properties that were listed but not rented, or not on the market at all, in the year leading up to the emergency.
For properties rented on January 7, 2025, the rule is straightforward: the rent charged at that time is the ceiling. If a unit was advertised but not rented, the highest advertised price sets the cap. And for properties not rented or listed in the prior 12 months, the law defers to HUD’s Fair Market Rent (FMR), allowing landlords to charge no more than 160% of the FMR, with an additional 5% adjustment if the property is furnished.
But here’s the rub: landlords must navigate this web of restrictions with meticulous documentation. A single misstep—an undocumented listing, an improperly calculated adjustment—could lead to fines of up to $10,000 per violation, enforced by the district attorney.
The Tenant’s Perspective: A Lifeline in Turbulent Times
For tenants, AB 246 offers a lifeline during an otherwise precarious period. With displacement and financial strain already widespread, the law ensures that rents remain predictable. Tenants renting a property at $2,000 per month in January 2025 can rest assured that their rent will remain at that level until well after the emergency subsides.
The law also extends protection against evictions carried out in bad faith. Landlords are prohibited from evicting tenants solely to re-list the property at a higher rate. Any attempt to circumvent the freeze through such means risks legal action, not just under AB 246 but also under California’s broader Unfair Competition Law.
But this protection comes at a cost. By freezing rents, the law also freezes the market, making it less attractive for landlords to offer new properties or invest in upgrades. Over time, tenants may face fewer choices and deteriorating housing conditions as landlords withdraw from the rental market.
A Landlord’s Dilemma: Compliance or Consequences
The burden AB 246 places on landlords cannot be overstated. Consider the owner of a single-family home who listed their property for $10,000 per month in late 2024 but failed to find a tenant. That figure now becomes the maximum legal rent. If the landlord decides to furnish the property, they may add an additional 5%, bringing the cap to $10,500 per month. Anything beyond this amount risks triggering the law’s punitive mechanisms.
For landlords with properties that were neither rented nor listed in the prior year, the calculations grow more complex. The FMR for a two-bedroom unit in Los Angeles County, for instance, might be $2,500 per month. Under AB 246, the landlord can charge no more than $4,000 per month, or $4,200 if the unit is furnished. Every penny above this threshold is a potential violation, subject to enforcement by the district attorney.
This leaves landlords in an untenable position. Rising property taxes, insurance premiums, and maintenance costs do not pause for emergencies. Yet landlords are effectively locked into pre-emergency revenue levels, with no recourse to adjust rents even modestly.
The Clash of AB 246 and Penal Code §396
Traditionally, Penal Code §396 provided landlords with a degree of flexibility during emergencies, allowing for rent increases of up to 10% above the pre-emergency rate, with an additional 5% adjustment for furnished units. This provision, while restrictive, acknowledged the reality of rising costs during crises.
AB 246, however, shuts the door on this flexibility. In Los Angeles County, the 10% increase allowance under §396 is no longer applicable. Instead, the rent freeze imposed by AB 246 takes precedence, creating a stricter regime that leaves landlords with little room to maneuver.
For tenants, this means greater protection against price hikes. For landlords, it means grappling with one of the most restrictive rent control frameworks in the country.
What’s Next for Landlords and Tenants?
AB 246 is here to stay, at least for the foreseeable future. The law will remain in effect until 12 months after the state of emergency ends, which could stretch well into 2026. During this time, landlords must operate under tight constraints, while tenants benefit from the assurance of stable rents.
But the long-term consequences are harder to predict. Will landlords exit the market en masse, further tightening the supply of rental housing? Will tenants face reduced housing quality as landlords defer maintenance to cut costs? And will these emergency measures set a precedent for more sweeping interventions in the future?
For now, landlords must focus on compliance, maintaining meticulous records of rental rates, listings, and lease agreements. Tenants, meanwhile, should monitor their rights and report violations promptly. Both sides would do well to consult legal counsel to navigate this unprecedented regulatory landscape.
The Verdict: A Balancing Act, or a Tipping Point?
AB 246 represents the state’s latest attempt to balance the scales in a housing market fraught with inequities. But as with any blunt instrument, its effects will be felt unevenly. For tenants, it is a temporary reprieve. For landlords, it is a test of endurance. And for California’s housing market, it is yet another chapter in the ongoing saga of regulation versus reality.
