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California’s New Law (AB 2747)

What Landlords Need to Know About Offering Credit-Building to Tenants

Starting April 1, 2025, California landlords will be required to offer tenants the opportunity to report their rent payments to a credit bureau, thanks to the passing of Assembly Bill 2747.

This new legislation is part of a broader statewide push to promote financial inclusion and credit access, especially for renters who have historically had few opportunities to build credit through their largest recurring expense — rent.

America’s Rental Housing Crisis: Insights from the Joint Center for Housing Studies of Harvard University
What Is AB 2747?

AB 2747 is a law that requires most landlords to give tenants the option to have their monthly rent payments reported to a major credit bureau (such as Equifax, Experian, or TransUnion).

The goal? Help renters build credit histories and improve credit scores by demonstrating a consistent rent payment record.

Who Does This Apply To?

This law applies to landlords and property management companies who manage five or more residential units in California.

There are a few exceptions (like certain affordable housing providers already reporting rent or using specific public funding), but for most rental housing providers, this will be a new standard practice.
Most property management companies and landlords are opting to extend the benefit to a broader group of tenants to support financial wellness and improve tenant satisfaction.

What Are Landlords Required to Do?

Under AB 2747, landlords must:

  • Notify tenants in writing (in the lease or separately) that they have the option to enroll in a rent reporting service.
  • Provide a rent reporting service or refer tenants to one.
  • Ensure tenants are informed whether there is a fee for the service, and if so, how much.
  • Allow tenants to opt in or out of the reporting service at any time.

Why This Matters for Tenants

For renters who pay on time, rent reporting can:

  • Help boost credit scores
  • Open up access to better loan rates, rental housing, and job opportunities
  • Provide a transparent payment history to share with future landlords

What This Means for Our Clients and Residents

At Monterey Bay Property Management, we’re prepared to comply with AB 2747 well ahead of the July 1, 2025 deadline. We’re evaluating reliable rent reporting platforms and will be rolling out communication to residents in the coming months.

As always, we are committed to:

  • Keeping our property owners informed and compliant with California rental laws
  • Supporting our residents with tools that promote financial well-being
  • Making this transition seamless and stress-free

Have questions about how AB 2747 affects your property or tenants? Reach out to Jan Leasure and the MBPM team at Jan@MontereyRentals.com — we’re here to help you stay ahead of the curve.

America’s Rental Housing Crisis

America’s Rental Housing Crisis: Insights from the Joint Center for Housing Studies of Harvard University

Today, I had the opportunity to participate in a Zoom presentation led by the Joint Center for Housing Studies of Harvard University, titled “Deteriorating Affordability: An Update on America’s Rental Housing 2024.” The discussion highlighted the growing challenges in rental affordability across the nation—an issue that is no longer confined to high-cost states like California but has now become a nationwide crisis.

America’s Rental Housing Crisis: Insights from the Joint Center for Housing Studies of Harvard University

Key Takeaways from the Presentation

🔹 Rental Affordability at an All-Time Low

The United States has reached a new peak in rent unaffordability. While California renters and landlords have long faced some of the highest housing costs in the nation, the affordability crisis has now spread across all 50 states. Today, nearly 22 million households—approximately half of all renters—are cost-burdened, meaning they spend 30% to 50% of their income on rent.

🔹 Who is Most Affected?

The youngest renters (under 25) and the oldest renters (over 65) experience the highest cost burdens. More than half of Black and Hispanic renters are rent-burdened. Even among fully employed households, rental costs continue to outpace earnings

🔹 A Nationwide Struggle—From Urban Centers to Rural Communities

Rent affordability is no longer just a challenge in major metropolitan areas. Over one-third of renters in every state are now cost-burdened, with particularly severe impacts in:

  • The West, where high housing costs persist.
  • The South, where lower housing costs are offset by equally low wages.
  • Rural areas, where 40% of renters are now struggling to afford rent.

🔹 Rising Costs and Declining Availability

The increasing cost of rent is not just a result of inflation but also of declining rental stock. Several factors have contributed to this trend:

  • The demolition of older, more affordable units to make way for new developments.
  • Landlords exiting the market due to heightened regulatory pressures.
  • Rising construction costs, including both labor and materials, leading developers to prioritize luxury housing with higher profit margins over affordable units.

The median percentage of income spent on rent has now reached 31%, and alongside rising costs for food, energy, and healthcare, many renters are struggling to cover essential living expenses. A staggering 17% of renters reported falling behind on rent at some point in 2024, highlighting the precarious financial situation many households face.

Where is the Rental Market Headed?

📉 Rents Are Stabilizing—But Demand Still Outpaces Supply
After the sharp increases following the pandemic, asking rents have plateaued in many areas. However, demand for rental housing continues to exceed supply. Despite over 600,000 multifamily units being constructed last year, the need for housing remains critical—partially fueled by the increasing difficulty of purchasing a home in today’s market.

⚖️ Legislative and Policy Efforts Are Increasing
State and local governments are stepping up efforts to address the crisis, recognizing that rental affordability is no longer just a market trend but a policy imperative. However, economic uncertainty looms large, with experts hesitant to make definitive predictions about the future of the housing market.

A Call to Action: The Need for Smart Solutions

In 2024, California legislators declared housing a human right—a powerful statement, but one that lacked concrete plans for how to ensure access to affordable housing for all. To truly address this crisis, policymakers must prioritize increasing housing supply rather than relying on restrictive measures such as rent control, which often exacerbates shortages.

The path forward requires streamlining development processes, reducing regulatory barriers, and investing in sustainable, affordable housing solutions. Instead of discouraging new construction, we must create policies that incentivize environmentally responsible development while expanding rental options for all income levels.

The affordability crisis is a challenge we cannot afford to ignore. It’s time for bold action to ensure that safe, stable housing remains within reach for all Americans.

Jan Leasure, Managing Broker
www.MontereyRentals.com 
831-402-1765