AB 1157 Failed — But California Landlords Aren't Safe Yet
AB 1157 Failed — But California Landlords Aren't Safe Yet
By Erica Walters | CalDRE #02239622 | Ownership Theory
AB 1157 failed on February 2, 2026. The California Assembly filed it with the Chief Clerk — effectively killing it for this session.
That does not mean California landlords are in the clear.
What AB 1157 Would Have Done
AB 1157 would have made three sweeping changes to California's existing rent law under AB 1482:
— Dropped the annual rent cap from 5%+CPI (max 10%) to 2%+CPI (max 5%)
— Extended rent control to single-family homes, condos, ADUs, and townhomes currently exempt from state law
— Eliminated AB 1482's January 1, 2030 sunset date — making rent control permanent statewide
It failed. But it came close. Assembly member Ash Kalra has introduced versions of this bill twice. It will return.
What The Numbers Look Like
On a $1.2M Bay Area fourplex with $129,600 in current gross rents, the difference between unregulated growth and an AB 1157 scenario compounds fast.
By Year 3: projected NOI drops from $90,358 to $83,506 — a $6,852 annual loss.
By Year 5 exit: projected property value drops from $1,504,259 to $1,219,031 — a $285,228 loss on a $1.2M asset. Before financing costs.
That is the number most investors never model before they close.
What Is Actually Law Right Now
AB 1482 governs most California rentals today. Here is what it allows for 2025–2026:
— Lower-CPI Bay Area counties (San Francisco, Alameda, Contra Costa, San Mateo, Marin): 6.3% maximum annual increase
— Higher-CPI counties (Santa Clara, Sonoma, Napa): 7.7% maximum annual increase
— San Francisco local ordinance: 1.4% — stricter than state law, applies instead of AB 1482
— Exempt from AB 1482: single-family homes owned by individuals, properties built after January 1, 2005
Why You Should Still Model AB 1157
AB 1157 failed — but it defined the direction of California rent policy. Any investor underwriting a Bay Area property in 2026 should run two scenarios: current law and an AB 1157 scenario. The gap between them is your regulatory risk in dollars.
DealAgent models both automatically for any California address.
Analyze your deal under both scenarios free at dealagent.ownershiptheory.com
Sources: LegiScan CA AB1157 | California Apartment Association | SF.gov Annual Rent Increase 2025–2026 | AB 1482 Bay Area Rates
