How would California SB 493 price gouging changes affect multifamily rental pricing during a declared emergency in Southern California?
Could a geopolitical event thousands of miles away suddenly freeze rent growth in Los Angeles? On June 18, 2026, the California Assembly amended SB 493 to add “war” to the list of events that qualify as a state or local emergency under Penal Code Section 396. That statute governs California’s price gouging law, which caps rental increases at 10 percent above the pre emergency rental price during a declared emergency and for at least 30 days after, subject to extension.
“SB 493 doesn’t just expand the definition of a state of emergency — it expands the legal trigger for criminal rent caps,” said Oron Maher, Broker-Director at Maher Commercial Realty. “By adding ‘war’ to Penal Code Section 396, the Legislature is widening the circumstances under which a 10% rental increase ceiling can be imposed overnight, which materially changes risk planning for multifamily owners in Southern California.” Maher is a licensed real estate broker and California attorney.
Under existing law, once a state or local emergency is declared, landlords cannot raise rents by more than 10 percent for housing with an initial lease term of no longer than one year. The statute also prohibits evicting a tenant and re renting the unit at a higher price than permitted during the emergency window. Violations are misdemeanors and unlawful business practices under Business and Professions Code Section 17200. Local governments may extend the prohibitions in 30 day increments if deemed necessary.
The structural shift is not the cap itself but the trigger. Historically, the statute has been associated with natural disasters such as wildfires or earthquakes. By adding war, including active United States military operations, the Legislature increases the probability that the 10 percent ceiling could be activated by geopolitical events rather than localized physical damage. That widens regulatory risk exposure for multifamily operators across Southern California.
For owners in rent sensitive submarkets such as West Hollywood, Koreatown, Culver City, and the San Fernando Valley, the practical implication is straightforward. Pricing flexibility during periods of sudden demand spikes may be constrained even if the local housing stock is physically unaffected. Insurance displaced households and tenants seeking perceived stability during national instability could intensify demand. At the same time, short term rental operators converting units into longer term leases during emergencies would also fall within the statutory framework. The supply and demand response would unfold inside a hard 10 percent ceiling.
Investors underwriting acquisitions in the region must now factor in a broader set of emergency scenarios when modeling cash flow volatility. In a high inflation or conflict driven environment, the inability to reset rents above 10 percent for a defined window can alter near term yield assumptions, particularly for properties with below market in place rents.
Watch the final Assembly floor votes and Senate concurrence on the June 18, 2026 amended version, as well as any gubernatorial signing statement clarifying legislative intent. Longer term, the critical signal will be whether future federal military actions or congressional war declarations are paired with California emergency proclamations, which would activate the 10 percent rental cap framework statewide or locally and test how often this newly broadened trigger is used. For owners and investors evaluating acquisitions or dispositions, Maher Commercial Realty incorporates these statutory triggers directly into underwriting so pricing reflects not just market cycles but legal activation risk at the moment it matters.
This analysis is based on reporting originally published by Bill Text.
Bill Text – SB-493 Unlawful business practices: price gouging.
