California 2026 Housing Laws: AB 628, AB 1414, AB 747 Guide

What are the main 2026 California housing laws affecting San Diego landlords?

Four major laws took effect January 1, 2026, creating sweeping changes for San Diego rental property owners. AB 628 mandates that landlords provide a working stove and refrigerator in all new, renewed, or amended residential leases, elevating appliances to the same habitability standard as heat and hot water.

AB 1414 requires landlords to allow tenants to opt out of paying for third-party internet service subscriptions offered through bulk-billing arrangements without penalty. AB 747, known as the SPARE Act, increases proof-of-service documentation requirements in unlawful detainer cases beginning in 2027, requiring detailed records demonstrating proper service.

AB 414 mandates electronic return of security deposits when landlords received security or rental payments electronically, unless both parties agree otherwise in writing. These laws collectively reshape landlord obligations from Point Loma to Mission Valley, creating compliance costs that particularly impact small-scale operators managing properties in neighborhoods like Ocean Beach, Clairemont, and Bay Park.

How does AB 628 appliance requirement impact San Diego rental properties?

AB 628 introduces substantial upfront and ongoing costs for San Diego landlords who previously rented units without appliances. The law requires landlords to provide and maintain working stoves and refrigerators for the duration of tenancies beginning, renewing, or amending on or after January 1, 2026. Month-to-month rentals are automatically covered since these leases renew monthly.

Landlords must also repair or replace appliances subject to manufacturer recall within 30 days of receiving notice. For properties in Pacific Beach, La Jolla, and Mission Beach where older units may lack built-in appliances, this creates immediate capital expenses. Beyond purchase costs, landlords face ongoing maintenance and replacement obligations since appliances have limited lifespans and are prone to mechanical failure.

The California Association of Realtors warned this requirement "will lead to heavier burdens on the courts and a dramatic reduction in the state's availability of rental housing supply." Exemptions exist only for permanent supportive housing and residential hotels with shared kitchens, leaving most San Diego rental properties subject to these new habitability standards.

What does AB 1414 internet opt-out rule mean for landlords?

AB 1414, effective January 1, 2026, fundamentally changes how San Diego landlords can offer bulk internet services in rental properties across neighborhoods from Hillcrest to University Heights and Normal Heights. The law requires landlords to allow tenants to opt out of paying for wired internet, cellular, or satellite service subscriptions offered through third-party providers in connection with their tenancy.

Tenants who exercise opt-out rights can deduct the subscription cost from their rent, and landlords are prohibited from retaliating against tenants for declining these services. While landlords can still offer bulk-billing arrangements, they must provide tenants genuine choice without penalty.

This impacts revenue streams for landlords who previously included bundled internet fees as part of rental packages, particularly in newer developments in areas like Downtown San Diego, East Village, and Little Italy where bulk internet agreements were common. Landlords must provide written notice of opt-out rights and cannot require service participation as a condition of tenancy. The law focuses on reducing mandatory bundled fees and increasing affordability for renters who prefer their own providers or don't want the service.

How does AB 747 fee transparency change rental advertising?

AB 747, the SPARE Act, primarily addresses eviction procedure documentation rather than fee transparency in rental advertising. Taking effect in 2027, AB 747 significantly increases proof-of-service documentation requirements in unlawful detainer cases, requiring landlords to demonstrate proper service with detailed records and evidence.

However, separate fee transparency requirements come from different proposed legislation effective January 1, 2026. These regulations mandate that San Diego landlords include all mandatory fees in advertised rent, with any optional services or add-on charges clearly disclosed upfront. No last-minute "junk fees" are allowed when prospective tenants inquire about properties in Golden Hill, City Heights, El Cerrito, or Rolando.

Landlords marketing rental units in College Area, Allied Gardens, Del Cerro, or San Carlos must provide full transparency about costs before tenants commit to leases. This prevents the practice of advertising lower base rents while adding substantial fees during the application process, creating more accurate pricing for San Diego renters comparing options across neighborhoods.

When must landlords comply with AB 414 electronic deposit returns?

AB 414 took effect January 1, 2026, requiring immediate compliance for security deposit returns from that date forward. The law amends California Civil Code Section 1950.5 to mandate electronic return of security deposits when landlords received the security deposit or rental payments electronically, unless both parties designated another return method through written agreement at lease signing. Verbal agreements are insufficient.

San Diego landlords managing properties in Kearny Mesa, Serra Mesa, Mission Valley, or Point Loma must provide written notice to tenants of their right to receive electronic refunds when electronic payment methods were used during the tenancy. For multi-tenant leases, deposits must be returned in a single payment made payable to all adult tenants unless otherwise agreed in writing.

The 21-day deadline for returning deposits with itemized statements remains unchanged, as do limits on allowable deductions. Paper checks are still permitted but only when both parties agree in writing. This modernizes deposit return procedures across San Diego County while maintaining tenant protections against improper withholding.

What is the 2026 rent cap for San Diego County?

San Diego County's maximum allowable rent increase for the period between August 1, 2025 and July 31, 2026 is 8.8%, calculated as the 5% base plus 3.8% CPI change from March 2025. This cap applies under AB 1482 to most residential properties built before January 1, 2005, covering thousands of rental units across Pacific Beach, La Jolla, Mission Beach, Ocean Beach, North Park, South Park, and other established San Diego neighborhoods.

The 8.8% San Diego County limit is among the higher rates in California during this period. While AB 1482 allows landlords to increase rents twice within a 12-month period, the total increase cannot exceed 8.8% for that timeframe. Rent increases of 10% or less require minimum 30-day written notice to tenants. The cap represents the lower of either 5% plus local CPI or 10% maximum.

With San Diego rents falling for 6 consecutive months through early 2026 and vacancy rates at 5.7%, many landlords face a disconnect between allowable increases and market realities, particularly for properties in Banker's Hill, Clairemont, Bay Park, and Linda Vista where rental demand has softened.

Why are some San Diego landlords selling to cash buyers in 2026?

San Diego rental property owners face an unprecedented confluence of regulatory compliance costs, falling rents, and negative cash flow pressures driving strategic exits through cash sales in 2026. The combination of AB 628 appliance requirements, AB 1414 internet opt-out provisions, ongoing balcony inspection mandates (with $100-$500 daily penalties accumulating to over $180,000 annually for non-compliance), and property expense inflation creates substantial financial strain.

With San Diego rents declining for 6 consecutive months for the first time in 15 years and vacancy rates elevated at 5.7%, owners who purchased during the 2020-2022 appreciation surge with leveraged financing may face negative monthly cash flow when vacancies occur. The CoStar forecast suggests continued rent pressure throughout 2026.

Cash buyers offer strategic exits for landlords wanting to avoid further rent declines that could erode equity, particularly for downtown properties purchased at peak pricing that now rent for less. With mortgage rates forecast to remain near 6% through 2026, cash sale options provide timeline certainty and eliminate transaction risk compared to traditional listings.

This is especially attractive for landlords managing older properties in Pacific Beach, Mission Beach, and Ocean Beach where AB 628 appliance upgrades represent significant capital outlays on top of existing maintenance obligations.

Conclusion

California's 2026 housing law package creates a complex compliance landscape for San Diego landlords managing properties from coastal neighborhoods to inland communities. The simultaneous implementation of AB 628, AB 1414, AB 747, and AB 414 alongside the 8.8% rent increase cap requires substantial administrative attention and financial resources.

While these laws aim to improve tenant protections and housing affordability, they arrive as San Diego's rental market experiences its first sustained rent decline in 15 years with elevated vacancy rates of 5.7%. Landlords must weigh ongoing compliance costs against rental income potential in a softening market.

For property owners in Pacific Beach, La Jolla, Mission Beach, North Park, and throughout San Diego County, understanding these requirements is essential for making informed decisions about whether to adapt operations or consider exit strategies through cash sales that provide certainty in an increasingly regulated environment.