For years, one of the most common practices in the rental market was requiring tenants to prove that they earn at least three times the rent. This was considered a safety net for landlords to ensure that tenants could pay rent and manage other living expenses. But can landlords ask for three times the rent in California?
Well, the answer has changed as of July 2024. Now, landlords in California are no longer allowed to ask tenants for proof of earning three times the rent.
What Changed With the New California Law?
As of July 1st, 2024, the state of California has implemented a new law that prohibits landlords from requiring potential tenants to prove that they earn three times more than the monthly rent. For many prospective tenants, this new rule is a game changer.
Mart / Pexels / The three-times-the-rent requirement was a substantial barrier for people, especially in regions with skyrocketing rents like Los Angeles, San Francisco, and other parts of the state where housing costs are notoriously high.
Many tenants could otherwise afford rent but didn’t meet the rigid criteria due to non-traditional employment or inconsistent income. Gig workers, freelancers, and even people with stable jobs but low savings often struggled to qualify for housing under this rule.
Now, with this barrier removed, housing advocates hope that more people will have access to affordable housing and that the rental market will become more inclusive and fair.
Why Was the Three-Times-the-Rent Rule Controversial?
The rule requiring proof of income was long seen as a way to protect landlords from tenants who might default on their rent payments. However, critics of the policy argued that it was overly strict and unfairly targeted people with non-traditional or inconsistent incomes.
For example, gig workers, who represent a growing portion of the California workforce, often have fluctuating incomes that do not meet the monthly income requirement. While their yearly earnings may be more than enough to afford rent, they were frequently disqualified due to monthly income inconsistencies.
Can Landlords Still Evaluate a Tenant’s Ability to Pay?
Even though landlords can no longer ask tenants to prove they earn three times the rent, this doesn’t mean they are left without ways to evaluate a potential tenant’s ability to pay. Landlords can still look at other financial factors, such as a tenant’s credit score, rental history, and references from previous landlords. These factors can give landlords a sense of whether the tenant is reliable and responsible when it comes to paying rent.
Frent / Pexels / Despite the new California law, some landlords may still require a larger security deposit or request co-signers.
This is true in cases where the tenant’s income is on the lower side or credit history is lacking. This approach allows landlords to still protect their financial interests while complying with the new law.
In other words, landlords still have tools to vet potential tenants. They just can’t rely solely on income anymore.
How Do Potential Tenants Benefit from This New Rule?
The new law offers significant benefits to potential tenants, particularly those who struggled under the old system. For many tenants, providing proof of a stable, consistent income was a major hurdle. Freelancers, contractors, and gig workers often have fluctuating incomes, which made it nearly impossible to meet the three-times-the-rent rule, even if they were perfectly capable of paying their rent on time.
Under this new regulation, these workers are no longer automatically disqualified based on an arbitrary income rule. Instead, their rental applications will be judged more holistically, considering factors such as rental history and credit scores. This could provide a more balanced assessment of their ability to meet rental obligations. For tenants in highly competitive rental markets, this new rule opens doors that were previously closed due to income requirements alone.
