Keep an Eye on AB 1157 and Plan Accordingly for 2026
California's rental housing landscape faces another potential shift that could significantly impact Orange County property owners. AB 1157, the Affordable Rent Act, would expand rent control and tenant protections across the state if it becomes law.
While the bill's future remains uncertain, that uncertainty is exactly why Orange County landlords should pay attention and make strategic decisions now.
What AB 1157 Would Change for Orange County Property Owners
If enacted, AB 1157 would fundamentally alter how rental properties operate throughout California, including right here in Orange County.
Rent Increase Caps
The bill would reduce permissible annual rent increases from the current 5% plus cost of living (capped at 10% maximum) to 2% plus cost of living, or 5% maximum, whichever is lower.
Expanded Property Coverage
Currently, many Orange County properties enjoy exemptions from rent control, including:
• Single-family homes
• Accessory dwelling units (ADUs)
• Individually owned condominiums
AB 1157 would eliminate these exemptions, bringing these property types under rent control for the first time.
Permanent Restrictions
The legislation would remove the January 1, 2030 sunset date from current tenant protection provisions, making these restrictions permanent rather than temporary.
Strengthened Tenant Protections
Just-cause eviction requirements would be reinforced, making it more difficult to terminate tenancies without specific legal grounds.
Will AB 1157 Pass? The Current Landscape
No one can predict with certainty whether AB 1157 will become law. The bill has strong backing from tenant advocacy groups and some legislators, but faces serious opposition from real estate and housing industry organizations.
The legislation has already stalled once and is moving through the Legislature on an extended timeline. This means it's very much alive, but far from guaranteed passage.
The Bigger Picture
Even if AB 1157 doesn't pass in its current form, California shows a clear long-term trend toward stronger tenant protections. Future versions of this bill or similar legislation are likely to emerge.
For Orange County property owners, this pattern suggests that regulatory changes favoring tenants will continue, regardless of any single bill's fate.
Why 2026 Matters for Orange County Landlords
Under current California law, many Orange County properties can still increase rent by the maximum allowed under existing regulations. In many cases, this is materially higher than the proposed 5% cap.
If your Orange County rental property is currently under market rent, 2026 may represent one of your last opportunities to responsibly close that gap before tighter restrictions potentially take effect.
The Math is Simple
Consider a property in Irvine or Newport Beach that's $200 below market rent:
• Under current law: You might be able to increase rent by 8-10% to reach market rate
• Under AB 1157: You'd be limited to 5% maximum, potentially leaving money on the table permanently
Lost Opportunities Compound
Waiting has real financial consequences that grow over time:
• Lost rental income compounds year after year
• Future caps could permanently lock in below-market rents
• Catch-up increases may no longer be legally possible
Smart Moves for Orange County Property Owners in 2026
Review Your Current Market Position
Start by understanding where your Orange County properties stand relative to current market rents. Areas like Costa Mesa, Huntington Beach, and Anaheim have seen significant rent growth, and your properties may be undervalued.
Act Within Current Legal Limits
If your property is under market, consider increasing rent to the maximum allowed under existing California law. This isn't aggressive: it's prudent asset management that protects your investment.
Document Everything
Maintain detailed records of market research, rental comparisons, and compliance with current regulations. This documentation protects you and demonstrates responsible property management.
Plan for Multiple Scenarios
Develop strategies that work whether AB 1157 passes or not. This approach keeps you flexible regardless of legislative outcomes.
The Cost of Waiting: A Real Orange County Example
Consider a typical Orange County scenario:
A property owner in Fullerton has a 2-bedroom unit rented at $2,400 per month. Similar units in the area rent for $2,700. Under current law, they could potentially increase rent to market rate.
But if AB 1157 passes and they wait:
• Year 1: Limited to 5% increase = $2,520 (still $180 below market)
• Year 2: Another 5% = $2,646 (gap may widen if market rents continue rising)
• The below-market position becomes permanent
That's potentially $2,160 in lost annual income that compounds over time.
Orange County Property Owners: Your Next Steps
Get a Market Analysis
Understand exactly where your properties stand in today's Orange County rental market. Different neighborhoods: from beach communities to inland areas: have varying dynamics.
Review Rent Roll Immediately
Identify which properties are below market and prioritize them for potential increases under current regulations.
Stay Informed
Keep tracking AB 1157's progress through the Legislature. Changes can happen quickly in California's political environment.
Plan Compliance Strategy
Whether the bill passes or not, ensure your Orange County properties meet all current and potential future requirements.
Why Professional Property Management Matters More Than Ever
Navigating California's complex rental regulations requires expertise, especially with potential changes on the horizon. Orange County property owners need partners who understand both current law and emerging trends.
Professional property management provides:
• Expert knowledge of California rental regulations
• Market analysis and rent optimization strategies
• Compliance monitoring and documentation
• Risk mitigation as laws evolve
Bottom Line for Orange County Property Owners
AB 1157 may pass, or it may not. What's certain is that uncertainty favors preparation over procrastination.
Orange County property owners who plan ahead retain flexibility and protect their investments. Those who wait may find their options permanently restricted.
The rental market doesn't pause for legislative uncertainty. Neither should your property management strategy.
Take Action Today
Don't let regulatory uncertainty cost you income. If you own rental property in Orange County, now is the time to evaluate your position and make strategic decisions within current legal frameworks.
Ready to protect your Orange County rental investment? PMI Sunny OC provides expert property management services designed specifically for local market conditions. We help property owners navigate California's complex regulations while maximizing returns and ensuring compliance.
Contact PMI Sunny OC today for a confidential market analysis of your Orange County rental properties. Let's make sure you're positioned properly before any new restrictions take effect.
Visit our website or call us to discuss your property management needs. Your investment deserves professional protection in an uncertain regulatory environment.
