California 2026 Housing Laws: San Diego Landlord Guide

• 29 min read • By San Diego Fast Cash Home Buyer

TL;DR: Multiple Housing Laws Hit San Diego Landlords in 2026

January 1, 2026 marked a seismic shift for California landlords. AB 628 requires working stoves and refrigerators ($1,375-$4,100 per unit). SB 79 allows 8-story buildings near trolley stations (July 1 deadline). AB 1482 caps rent increases at 5% + CPI. Combined burden overwhelming property owners across San Diego County.

For small landlords managing 1-4 units, the cumulative regulatory burden has reached a tipping point. Cash buyers offer 7-14 day closings with as-is purchases—no appliance upgrades, no compliance investments required.

San Diego rental property showing compliance requirements under AB 628 and SB 79 housing laws

January 1, 2026 marked a seismic shift for California landlords. Multiple new housing laws took effect simultaneously, creating immediate compliance obligations that are overwhelming property owners across San Diego County. Assembly Bill 628 now requires all rental units to have working stoves and refrigerators—a mandate that's forcing thousands of landlords to budget for unexpected appliance upgrades costing $800 to $2,500 per unit. Combined with Senate Bill 79's transit-oriented development pressures and accelerated approval timelines under AB 1007, many San Diego rental property owners are facing a critical decision: invest thousands in compliance, or exit the landlord business entirely.

For small landlords managing 1-4 units in neighborhoods like Pacific Beach, North Park, and Mission Valley, the cumulative regulatory burden has reached a tipping point. Property owners who once viewed rental income as passive wealth-building are now confronting a complex web of requirements, shortened approval timelines, and development pressures that demand active management and significant capital investment. The question isn't just about the cost of two new appliances—it's whether continuing as a landlord makes financial sense in California's increasingly regulated rental market.

AB 628: Mandatory Working Appliances Requirement Hits San Diego Landlords

The most immediate compliance challenge facing San Diego landlords in 2026 is Assembly Bill 628, which adds working stoves and refrigerators to the list of characteristics required for a dwelling unit to be considered legally tenantable. According to the California Apartment Association, the law applies to all leases entered into, amended, or extended on or after January 1, 2026.

The financial impact varies significantly by property type and current appliance condition:

Per-Unit Compliance Costs:

  • Refrigerators: $675 to $2,500 installed, with basic models starting at $600-$800 and quality units ranging $800-$2,500
  • Stoves/Ranges: $700 to $1,600 installed, with gas models costing $800-$2,300 and electric ranges $650-$2,800
  • Total per unit: $1,375 to $4,100 for both appliances installed

For a San Diego landlord with a typical 4-unit property in North Park or City Heights, full compliance could require $5,500 to $16,400 in immediate capital expenditure. Month-to-month tenancies face the most urgent timeline, as these leases technically renew monthly, making January 2026 the effective compliance deadline.

The law specifies that appliances must be in "good working order"—stoves must be "capable of safely generating heat for cooking purposes" while refrigerators should be "capable of safely storing food." Additionally, landlords have just 30 days to repair or replace recalled appliances after manufacturer notification.

This represents a particularly significant shift for Southern California markets. It was previously common for San Diego landlords to rent homes without stoves or refrigerators, placing that responsibility on tenants. AB 628 eliminates this practice entirely.

Exemptions exist for permanent supportive housing, single-room occupancy units sharing kitchen facilities, residential hotels, and assisted living facilities with communal kitchens. However, these exemptions don't apply to the vast majority of San Diego rental properties.

SB 79 Transit-Oriented Development: Rental Properties in High-Pressure Zones

While AB 628 creates immediate out-of-pocket costs, Senate Bill 79 is fundamentally reshaping property values and development pressure for rental properties near San Diego's trolley system. Governor Newsom signed SB 79 in October 2025, and its principal upzoning provisions take effect July 1, 2026 for incorporated cities.

The law overrides local zoning to allow:

  • 8-story buildings directly adjacent to trolley stops
  • 6-story buildings within a quarter-mile of transit stations
  • 5-story buildings between a quarter-mile and half-mile from transit

According to the San Diego Union-Tribune's analysis, an estimated 83 major transit stations in San Diego County could be eligible for midrise housing development under SB 79. The San Diego Trolley is classified as a Tier 2 TOD (transit-oriented development) stop under the legislation.

Neighborhoods Most Affected:

  • Mission Valley: Every trolley stop along the Green Line faces potential redevelopment pressure
  • College Area: Properties near SDSU trolley stations are prime targets for student housing developers
  • North Park: The developing area around the University Avenue station
  • Downtown/Little Italy: Though Mayor Todd Gloria notes these areas have already "anticipated the kind of changes this law calls for"
  • El Cajon and Santee: Cities with minimal existing development near trolley stops face the biggest changes

For landlords, SB 79 creates a unique pressure: rental properties in these transit corridors are increasingly attractive to developers willing to pay above-market prices for redevelopment opportunities. Projects must include affordability requirements (7-13% of units for low-income households), but the increased density makes these projects financially viable for developers.

This puts landlords in a strategic position: continue collecting rental income on a property that may face development pressure and tenant turnover, or capitalize on elevated property values by selling to developers or cash buyers before the July 2026 deadline creates a flood of similar properties on the market.

The Cumulative Burden: When Multiple Regulations Overwhelm Small Landlords

AB 628 and SB 79 don't exist in isolation. San Diego landlords are navigating an increasingly complex regulatory environment where multiple compliance obligations stack on top of each other:

AB 1482 Rent Control (Ongoing):

From August 1, 2025 to July 31, 2026, rent increases are capped at 5% plus local CPI, or 10%, whichever is lower. This limits landlords' ability to recoup compliance costs through rent increases.

AB 1248 Fee Disclosure Requirements:

Proposed to apply to new tenancies after January 1, 2026, AB 1248 requires detailed disclosure of all fees and optional services in both advertisements and lease agreements.

AB 1007 Accelerated Approval Timelines:

This law establishes a 45-day shot-clock for housing project approvals. While aimed at streamlining development, it creates pressure on landlords considering property improvements or ADU additions.

SB 610 Post-Disaster Responsibilities:

Expands landlord obligations following disasters such as wildfires and floods, including remediation responsibilities and rent payment rules during uninhabitable periods.

AB 414 Security Deposit Changes:

Requires landlords to offer electronic return of security deposits and provides new flexibility for multiple residents on a lease.

For part-time landlords—those managing 1-4 rental properties while maintaining other careers—the administrative complexity has become untenable. The risk of non-compliance is rising as regulations multiply.

The compounding effect is particularly severe for landlords who inherited rental properties and lack professional property management expertise. A Pacific Beach duplex owner, for example, now faces AB 628 appliance costs ($2,750-$8,200 for 2 units), ongoing rent control compliance tracking, fee disclosure documentation requirements, potential development pressure if near transit, and standard maintenance, tenant management, and legal compliance costs.

Landlord Financial Analysis: Comply vs. Sell Decision Framework

Faced with new compliance burdens, San Diego landlords need a clear-eyed financial analysis of their options. Here's how to structure the decision:

Total 2026 Compliance Costs (4-unit property example):

  • AB 628 appliances: $5,500-$16,400
  • Legal/professional review of new requirements: $500-$1,500
  • Updated lease agreements and fee disclosures: $300-$800
  • Property management software for compliance tracking: $400-$1,200 annually
  • First-year total: $6,700-$19,900

Ongoing Annual Landlord Responsibilities:

  • Property management (if outsourced): 8-12% of gross rental income
  • Maintenance and repairs: 1-2% of property value annually
  • Insurance: $1,200-$3,000 for multi-unit properties
  • Property taxes: 1.1% of assessed value in San Diego County
  • Regulatory compliance monitoring: $600-$1,500
  • Appliance maintenance/replacement reserves: $500-$1,000 per unit

Tax Implications of Selling:

California property owners face particularly high tax burdens. California landlords can face up to 42.1% of net proceeds paid as federal and state taxes—the highest potential tax liability of any state.

This includes:

  • Federal capital gains tax (0%, 15%, or 20% depending on income)
  • California state capital gains tax (up to 13.3%)
  • Depreciation recapture tax (25% federal)
  • Net investment income tax (3.8% for high earners)

1031 Exchange Alternative:

Landlords can defer all capital gains taxes by completing a 1031 exchange, but California's claw-back provision creates complexity. If you exchange a California property for out-of-state replacement property, you'll owe California taxes when eventually selling the replacement in a taxable sale. Critical deadlines: 45 days to identify replacement properties, 180 days to close.

5-Year Net Income Projection (Sample 4-unit property in North Park):

Scenario A: Comply and Continue Operating

  • Annual gross rental income: $96,000
  • Less: Operating expenses (40%): -$38,400
  • Less: Property management (10%): -$9,600
  • Less: Mortgage (assuming 50% LTV): -$24,000
  • Less: First-year compliance costs: -$3,980
  • Net annual cash flow: $20,020
  • 5-year total: $100,100

Scenario B: Sell to Cash Buyer

  • Property value: $1,400,000
  • Purchase price (basis): $800,000
  • Gross profit: $600,000
  • Less: Depreciation recapture: -$36,250
  • Less: Capital gains tax (37.1%): -$168,330
  • Less: Closing costs (1%): -$14,000
  • Net proceeds: $1,181,420
  • Reinvested at 5% annually: $59,071/year
  • 5-year total: $295,355

This simplified analysis shows that even after substantial tax liability, liquidating rental property and reinvesting in passive vehicles (REITs, index funds, bonds) can generate significantly higher net income while eliminating landlord responsibilities.

Cash Buyer Solution: Immediate Exit from Landlord Responsibilities

For landlords who've decided compliance costs outweigh benefits, cash buyers offer distinct advantages over traditional sales:

Timeline Comparison:

  • Traditional sale: 60-90 days from listing to closing, with extended timelines in softening markets
  • Cash sale: 7-14 days from offer acceptance to closing

The San Diego rental market is softening, with vacancy rates around 4.0% and Class A luxury complexes experiencing 6.6% vacancy. Extended listing periods mean landlords continue paying property management, maintenance, and compliance costs during the sale process.

As-Is Purchase Benefits:

  • No AB 628 appliance upgrades required: Cash buyers purchase properties in current condition, eliminating the need for $1,375-$4,100 per-unit appliance investments before sale
  • No repairs or cosmetic improvements: Traditional buyers often request repairs after inspection; cash buyers typically waive inspection contingencies
  • Tenant-occupied properties accepted: No need to navigate tenant relocation or vacancy timing

Closing Certainty:

Approximately 27.8% of financed deals fall through due to financing issues. Cash buyers eliminate this risk entirely—no appraisal contingencies, no loan approval processes, no last-minute financing changes.

Tenant Management During Sale:

Cash buyers handle all tenant communication and transition logistics. Landlords exit all management responsibilities immediately upon closing, rather than managing tenants throughout a 60-90 day traditional sale process.

Strategic Exit Timing:

Selling before July 1, 2026 (when SB 79's upzoning provisions take effect) may position landlords ahead of potential increased supply in transit-corridor neighborhoods. Properties in Mission Valley, College Area, and North Park near trolley stations could see competitive pressure as other landlords similarly seek exits.

Geographic Impact: Which San Diego Neighborhoods Face Most Pressure

Compliance burdens and regulatory pressures vary significantly across San Diego County based on property location:

High-Pressure Transit Corridors (SB 79 Impact):

  • Mission Valley: All Green Line trolley stops face redevelopment pressure; landlords receiving developer inquiries should expect 10-20% premium over comparable non-transit properties
  • College Area: Student housing demand + trolley proximity + SB 79 density bonuses create perfect storm for developer interest
  • North Park: University Avenue corridor seeing both regulatory pressure and strong rental demand; landlords must weigh continued appreciation vs. compliance costs
  • Downtown/Little Italy/East Village: Already high-density; minimal additional SB 79 impact per Mayor Gloria

Coastal Rental Markets (High Compliance Costs):

  • Pacific Beach: AB 628 appliance costs combined with coastal permitting complexity for any property improvements; limited transit pressure (no trolley access)
  • La Jolla: High-value rentals face largest absolute appliance replacement costs ($2,000-$2,500 per unit for quality appliances matching property standards)
  • Ocean Beach/Point Loma: Similar coastal permitting challenges; landlords must navigate both AB 628 and Coastal Commission requirements for improvements

Working-Class Rental Areas (Affordability Pressure):

  • City Heights/El Cerrito/Rolando: AB 628 compliance costs are substantial relative to achievable rents; AB 1482 rent caps limit cost recovery
  • Spring Valley/Lemon Grove (unincorporated): County regulations + state requirements create dual compliance burden
  • Southeast San Diego: Market rents may not support compliance cost pass-through; margin compression for landlords

Low-Pressure Suburban Markets:

  • Clairemont/Bay Park: Established single-family rental market; moderate compliance impact; no transit pressure
  • Allied Gardens/Del Cerro/San Carlos: Similar moderate impact; typically owner-occupied but rental pockets exist
  • Linda Vista/Kearny Mesa: Mixed residential-commercial areas with diverse property types

Vacancy rates and market conditions vary dramatically by submarket, with Class B and C apartments (older, more affordable) maintaining just 2.5% vacancy while luxury Class A properties face 6.6% vacancy. This divergence means landlord decision-making must account for property type, location, and condition when evaluating compliance vs. exit strategies.

Market Timing Considerations for 2026

Several market factors create urgency for landlord decision-making in early 2026:

Supply Increases:

Market forecasts show vacancy rates remaining around 4.0%, with "vacancies sitting longer because there's more product competing for business." Downtown San Diego has become a "concession-driven market" where landlords offer deals to fill units.

Rent Growth Slowdown:

Projections show rent increases topping out at 3.7% by 2029—a sharp contrast to the double-digit increases of 2022-2023. Combined with AB 1482's 5% + CPI cap (max 10%), landlords face limited revenue growth while compliance costs accelerate.

SB 79 Timeline:

July 1, 2026 activation of upzoning provisions may trigger increased property listings in transit corridors as landlords seek exits before developer competition intensifies. Early sellers may capture better pricing.

Compliance Deadline Pressure:

Month-to-month tenancies required AB 628 compliance starting January 2026. Fixed-term leases face compliance as they renew throughout the year. Landlords selling before lease renewals avoid appliance upgrade costs entirely.

Frequently Asked Questions

What is AB 628 and how does it affect San Diego landlords?

AB 628 requires all California rental units to have working stoves and refrigerators starting January 1, 2026. The law applies to leases entered into, amended, or extended after that date. San Diego landlords must provide appliances in "good working order" and repair or replace recalled appliances within 30 days. For properties currently lacking these appliances, landlords face compliance costs of $1,375-$4,100 per unit. Month-to-month tenancies require immediate compliance, while fixed-term leases have until their next renewal.

How much does it cost to comply with AB 628 appliance requirements?

Costs vary by appliance quality and installation complexity. Basic compliance ranges from $1,375 to $4,100 per unit: Refrigerators cost $675-$2,500 installed (basic models $600-$800; quality units $800-$2,500), while Stoves/Ranges cost $700-$1,600 installed (gas $800-$2,300; electric $650-$2,800). For a typical 4-unit San Diego rental property, total compliance costs range from $5,500 to $16,400. Luxury properties in La Jolla or Point Loma requiring higher-end appliances to match property standards may exceed these estimates.

Can I sell my rental property without upgrading appliances first?

Yes. Cash buyers purchase rental properties "as-is" in their current condition, including properties lacking AB 628-compliant appliances. This eliminates the need to invest $1,375-$4,100 per unit before selling. Traditional buyers may also purchase non-compliant properties, but they typically factor renovation costs into their offers, potentially reducing your net proceeds. Cash buyers focused on rental property acquisition handle all compliance upgrades post-closing, allowing you to exit without capital expenditure.

What happens to my tenants if I sell to a cash buyer?

California tenant protections continue regardless of property ownership changes. Cash buyers typically either: (1) Continue existing leases with current tenants (most common for performing leases), (2) Offer tenant relocation assistance if planning major renovations, or (3) Provide proper notice if non-renewing leases (subject to just cause eviction requirements). San Diego tenants in properties subject to AB 1482 rent control maintain their protections under new ownership. The sale process itself doesn't change tenant rights or lease terms.

How do cash offers compare to traditional sales for rental properties?

Cash offers typically range from 85-95% of retail market value but eliminate many costs and risks. Timeline is 7-14 days vs. 60-90 days (avoiding 2-3 months of landlord costs during sale). Properties are purchased as-is, eliminating repair costs and AB 628 appliance upgrades ($5,500-$16,400 for 4-unit property). There are no financing contingencies (27.8% of financed deals fall through), and closing costs are reduced (typically 1-2% vs. 6-8% with agent commissions). Net proceeds often rival traditional sales when factoring in avoided costs, especially for properties requiring compliance upgrades or located in softening markets.

Will SB 79 affect my rental property value?

Properties within half-mile of San Diego Trolley stations may see increased value due to development potential under SB 79. The law allows 8-story buildings adjacent to trolley stops, 6-story buildings within quarter-mile, and 5-story buildings between quarter-mile and half-mile. Developers seeking sites for midrise housing may offer 10-20% premiums over comparable properties outside transit corridors. However, continued rental operation faces potential tenant turnover and neighborhood transformation as development proceeds. Landlords in Mission Valley, College Area, and North Park should obtain property valuations from both traditional appraisers and developers to understand full value range.

Should I sell now or wait to see how regulations evolve?

Several factors favor early 2026 action: AB 628 requires immediate action with waiting increasing carrying costs; SB 79 takes effect July 1, 2026 with transit-corridor properties potentially facing increased seller competition afterward; San Diego vacancy rates at 4.0% with extended listing periods in a softening market; and current capital gains rates are known while future tax policy creates uncertainty. However, landlords with recent capital improvements, properties in appreciating submarkets, or those using 1031 exchanges to upgrade portfolios may benefit from strategic waiting. The decision requires property-specific financial analysis.

What are the tax implications of selling my rental property in 2026?

California landlords face the nation's highest combined tax burden on rental property sales—up to 42.1% of net proceeds, including: Federal capital gains (0%, 15%, or 20% based on income), California state capital gains (up to 13.3%), Depreciation recapture (25% federal tax on accumulated depreciation), and Net investment income tax (3.8% for high earners). A 1031 exchange defers all taxes if you reinvest in qualifying like-kind property within strict deadlines (45 days to identify replacement properties, 180 days to close). However, California's "claw-back provision" means you'll owe state taxes when eventually selling replacement property in a taxable sale, even if located out-of-state.

Conclusion: Navigating San Diego's New Landlord Reality

The convergence of AB 628's appliance requirements, SB 79's transit-oriented development pressures, AB 1007's accelerated timelines, and ongoing AB 1482 rent control has created an unprecedented compliance environment for San Diego landlords in 2026. Property owners face a fundamental choice: invest significant capital and management attention into navigating California's regulatory complexity, or exit the landlord business and redeploy capital into passive investments.

For many small landlords—particularly those managing 1-4 units while maintaining other careers, those who inherited rental properties without property management expertise, or those with properties requiring substantial compliance investments—the cash buyer option offers immediate relief from mounting obligations.

The decision calculus is straightforward:

Continue as landlord if:

  • Properties are well-maintained with compliant appliances already in place
  • You have professional property management infrastructure to handle regulatory complexity
  • Your submarkets (like Pacific Beach, La Jolla, North Park) show strong rental demand and appreciation
  • You're positioned to benefit from SB 79 development premiums in transit corridors
  • Rental income and appreciation exceed alternative investment returns on a risk-adjusted basis

Consider selling to cash buyer if:

  • AB 628 compliance requires $5,500+ investment across your portfolio
  • Administrative burden of tracking multiple regulations exceeds your bandwidth
  • You're in softening submarkets with rising vacancy and extended listing periods
  • Properties are in transit corridors facing SB 79 redevelopment pressure
  • Tax-advantaged exit strategies (1031 exchange, installment sale) aren't priorities
  • Passive investment income (5-7% annually) rivals landlord net returns without management hassles
  • You're considering an exit strategy due to additional policy changes

San Diego landlords facing AB 628 compliance costs, SB 79 development pressures, or cumulative regulatory burden can explore exit strategies through no-obligation consultations with cash buyers specializing in rental properties. With 7-14 day closings and as-is purchases, you can exit all landlord responsibilities immediately—no appliance upgrades, no tenant management during sale, no regulatory compliance navigation required.

The California rental market has fundamentally changed in 2026. Your landlord strategy should change with it.