Introduction
Rent control returned to the forefront in early 2026 with AB 1157, a proposed Assembly Bill that would materially alter California’s statewide rent cap structure.
While AB 1157 is not yet enacted, its proposal alone is influencing owner behavior, underwriting assumptions, and long-term planning in San Diego
What Does AB 1157 Propose?
AB 1157 proposes several major changes:
- Lowering the rent cap from 5% + CPI (max 10%) to 2% + CPI or 5% (whichever is less)
- Removing the sunset provision, making rent control permanent
- Expanding Just Cause eviction protections
Why This Matters in San Diego
San Diego is already one of the most regulated rental markets in California.
Stricter rent caps would:
- Limit organic rent growth
- Penalize owners who delay increases
- Increase reliance on operational efficiency
Properties underwritten on aggressive rent growth assumptions may see valuation pressure.
Owner Strategy Implications
If AB 1157 advances, owners should reconsider:
- Delayed rent increases
- Heavy pro forma assumptions
- Short-term repositioning strategies
Timing becomes critical.
Current Status
At the time of writing:
- AB 1157 is proposed
- Scheduled for Assembly consideration
- Not yet enacted
Final Takeaway
Whether AB 1157 passes or not, the trajectory is clear: rent growth certainty is declining, making cash flow management more important than ever.
The information in this blog is for general informational purposes only and should not be your sole basis for financial or investment decisions. While ACI Apartments uses reliable sources for data and analysis, you should verify all information independently. This blog is not a comprehensive report on all changes to local, state, or federal laws affecting property owners and managers. Laws may have changed or been misinterpreted since publication. Always consult legal counsel or a licensed CPA before making decisions. ACI Apartments is not liable for actions taken based on this content. Information was gathered from CoStar and SDMLS.