SACRAMENTO – California Governor Gavin Newsom is facing a new round of pushback after a state appellate court ruling that pauses parts of local rent control enforcement. Housing advocates, tenant groups, and political rivals say the decision adds more confusion to California’s housing affordability crisis; at the same time, rents keep climbing in major cities like Los Angeles, San Francisco, and San Diego.
The ruling comes out of a long-running case brought by the California Apartment Association (CAA) against Pasadena’s rent stabilization ordinance. At the center is a set of landlord duties tied to rent increases, including required relocation assistance in certain cases.
The court order blocks some of those requirements when they apply to units that are exempt from local rent limits. Critics say that it undercuts tenant protections when many renters already feel squeezed.
In late December 2025, the California Court of Appeals agreed with the CAA on key issues. The court said a city can’t require relocation payments that are triggered by lawful rent increases on housing that is exempt from those rent controls under state law. That includes certain newer buildings and many single-family homes.
Even though this case focuses on Pasadena, the impact could spread. Other cities, including Los Angeles, have rules that connect relocation benefits to rent increases. The decision puts those policies under pressure and brings the ongoing tension into focus, local tenant protections on one side and state preemption rules on the other.
Newsom has long positioned himself as supportive of renters. He signed the Tenant Protection Act (AB 1482) in 2019, which created statewide limits on rent increases for many units and added just-cause eviction rules.
Now critics argue his broader approach, including efforts to boost housing supply near transit, hasn’t kept up with legal challenges and local resistance. Tenant advocates see the ruling as a sign that rent stability tools are getting weaker. Landlord groups call it a needed check on city overreach that can discourage rental housing investment.
Who Gains and Who Gets Hit in California
Winners: Landlords and property owners in strict rent control cities
Landlords, especially in cities with stronger local rent control rules, appear to benefit most. By limiting relocation assistance requirements tied to rent hikes on exempt units, the ruling can lower costs for property owners.
The CAA, which represents apartment owners and managers, praised the decision as a win for property rights. Small and mid-sized landlords may also see it as relief, after years of COVID-era restrictions and rising costs for insurance, repairs, and maintenance.
Losers: Renters facing higher rents and fewer relocation supports
Renters in affected cities could lose an important safety net. In Los Angeles, where average rents have risen in recent months, and vacancies remain tight, tenants may see fewer relocation benefits when rent increases push them out of a unit that’s exempt from local limits.
Tenant groups say the decision chips away at protections shaped by the Costa-Hawkins Rental Housing Act and AB 1482. AB 1482 limits annual rent increases for covered units to 5 percent plus local inflation, up to a maximum of 10 percent.
Many homes are already exempt, including newer construction and many single-family properties. Critics worry the ruling invites more legal attacks on local tenant safeguards.
Why Critics Say This Could Make Housing Less Affordable
Progressive housing groups and some Democratic lawmakers argue the ruling could speed up displacement in places where rents already outpace wage growth. They point to research and local experience that weaker tenant protections often line up with more forced moves and higher rent burdens.
They also argue that without strong relocation requirements, landlords may have an easier path to move out long-term tenants and reset rents closer to market rates. Over time, that can shrink the supply of lower-cost rentals.
The timing adds to the concern. Efforts to expand statewide rent protections have struggled. Assembly Bill 1157, which would have lowered the rent cap to 5 percent total (2 percent plus inflation), extended protections to more single-family homes and accessory dwelling units, and removed AB 1482’s 2030 sunset, did not move forward in early 2026 after earlier setbacks.
Voters have also rejected broader rent control expansions through Proposition 10 (2018), Proposition 21 (2020), and Proposition 33 (2024), making major changes harder to pass.
Rents Keep Climbing in Los Angeles, San Francisco, and Beyond
Rent pressure hasn’t eased. In Los Angeles, some local adjustments are set to lower caps to 4 percent in certain cases starting February 2026, but in many counties, rent increases are still approaching AB 1482 limits. San Francisco and Oakland have also reported higher rents, tied to limited new construction, a rebound in parts of the tech economy, and continued investor activity.
Newsom highlighted some of those issues in his January 2026 State of the State address. He proposed steps aimed at corporate landlords and large investor purchases of single-family homes, including possible new rules to curb institutional buying.
Critics say the court ruling lands in the middle of a tough cycle. If investor rules tighten, some argue that new supply could slow. If local protections weaken at the same time, renters could be exposed to more risk.
What Could Happen Next in the Pasadena Case
The Pasadena dispute may not be over. While the appellate court ruled for the CAA on major points, the case could still move to the California Supreme Court. As of now, no further appeal has been filed.
The bigger story may be what follows in other cities. The ruling may encourage landlord groups to challenge local ordinances that collide with state law. Tenant organizations may respond with their own legal efforts or push lawmakers to clarify what cities can require around relocation assistance.
Possible Policy Paths for Newsom and State Lawmakers
Newsom and the Legislature still have options to support renters without inviting more legal setbacks. Possible approaches include:
- Tougher enforcement of AB 1482, backed by clearer rules and more funding for tenant legal aid.
- New limits on large corporate ownership, including tax changes or restrictions aimed at entities that own thousands of homes.
- Faster housing production near transit, including policies tied to SB 79, which expands transit-oriented development allowances starting mid-2026, even as some local leaders push back.
- Local incentives for affordable housing, using targeted exemptions or funding to help add below-market units and reduce rent pressure.
Big changes remain difficult in a divided political environment, especially after multiple statewide votes rejected rent control expansion.
What Renters and Landlords Should Track in the Next Few Weeks
For renters
Pay close attention to rent increase notices, especially in February and March 2026, when many annual adjustments take effect. Watch for changes to relocation benefits in places like Pasadena and Los Angeles. Tenant groups recommend keeping records of landlord messages and getting legal help if rent increases appear to exceed AB 1482 limits or if an eviction looks improper. It’s also smart to follow any emergency action from the governor tied to corporate ownership.
For landlords
Continue to follow AB 1482 rules and any new 2026 requirements, including updates tied to habitability and property standards such as working appliances (AB 628) and disaster cleanup responsibilities (SB 610). Track any appeals in the Pasadena case and watch for copycat challenges that could affect relocation obligations across California. Property managers should also stay alert for new proposals tied to rent cap extensions or corporate landlord rules.
California’s housing crisis isn’t slowing down. With homelessness still high and many families leaving expensive areas, this court ruling highlights the fragile balance between tenant protections and property rights. How Newsom responds, through policy changes, enforcement, or new housing proposals, will shape what affordability looks like for millions of renters in 2026.
