What Is the Affordable Housing Act in California?

There is no single statute called the Affordable Housing Act in California. What people usually mean by that phrase is the state’s layered framework of housing laws, which together require every city to plan for housing at all income levels, force faster approvals for qualifying affordable projects, cap rent increases, reward developers who include below-market units, and fund construction through tax credits and state budget allocations. The main pieces are the Housing Element Law, the streamlined ministerial approval process under Government Code Section 65913.4, the Tenant Protection Act (AB 1482), the Density Bonus Law, and a set of financing programs run through the California Tax Credit Allocation Committee and HCD.

Each of these does a different job. Knowing which one applies to your situation matters more than the label.

What Cities Must Plan For: Housing Elements and RHNA

Every California city and county must adopt a “housing element” as part of its general plan and show how it will accommodate housing for residents at all income levels. The California Department of Housing and Community Development (HCD) reviews these plans.¹

The numbers behind those plans come from the Regional Housing Needs Allocation, or RHNA. Every eight years, each jurisdiction is assigned a minimum number of units it must plan for across four income categories: very low income (up to 50% of area median income), low income (50–80%), moderate income (80–120%), and above moderate income (over 120%).²

Cities aren’t required to build the units themselves. They are required to zone enough land and clear regulatory barriers so those units can be built. The housing element must also include programs to help produce housing for extremely low, very low, low, and moderate-income households, to preserve existing affordable stock, and to encourage accessory dwelling units at affordable rents.³

One boundary worth naming: inclusionary requirements, the rules that force a share of new units in a private development to be affordable, are set by individual cities, not by state law. There is no statewide mandate setting that percentage.

Faster Approvals for Affordable Projects

One of the strongest tools in the framework is the streamlined ministerial approval process. It was created by SB 35 in 2017 and extended through January 1, 2036, by SB 423 in 2023.⁴ Under Government Code Section 65913.4, a qualifying housing project gets ministerial approval, meaning the city checks the project against objective zoning standards and either approves or denies it. No discretionary review. No conditional use permit. No public hearing.⁵

How much affordability a project has to include depends on how far the city has fallen behind on its housing targets. In jurisdictions short on lower-income housing, at least 10% of the units must be affordable to households at or below 80% of area median income. In jurisdictions further behind, that threshold rises to 50%. In the San Francisco Bay Area, developers may alternatively dedicate 20% of units to households below 120% of AMI, as long as the average income restriction across those units stays at or below 100% of AMI.⁵

Affordability restrictions run 55 years for rental developments and 45 years for owner-occupied properties.⁴ Construction workers on these projects generally must be paid prevailing wages, though projects of 10 or fewer units that aren’t public works are exempt from prevailing wage and apprenticeship requirements.

Starting July 1, 2026, SB 79, the Abundant and Affordable Homes Near Transit Act, opens a similar pathway for housing near transit. Projects with at least five units, minimum density of 30 units per acre, average unit size capped at 1,750 net habitable square feet, and location within a quarter- to half-mile of qualifying transit stops become eligible for the same ministerial process. Because ministerial approvals are generally exempt from the California Environmental Quality Act, qualifying projects may move forward without project-level environmental review.

Density Bonus Law: Building More by Including Affordable Units

The Density Bonus Law, at Government Code Section 65915, gives developers the right to build more units than local zoning would normally allow if they include affordable housing. It is a state mandate. Cities cannot refuse it when the developer meets the criteria. The thresholds that trigger a bonus are low:

5% of units affordable to very low-income households (up to 50% of AMI).
10% of units affordable to low-income households (up to 80% of AMI).
10% moderate-income for-sale units in a common interest development (80–120% of AMI).
10% of units for transitional foster youth, disabled veterans, or homeless individuals.
100% affordable projects, where all units serve lower-income households (up to 20% may serve moderate-income households), which qualify for the maximum bonus.

The density bonus is what typically makes local inclusionary requirements financially workable. A developer forced to set aside affordable units can use the bonus to add enough market-rate units for the project to pencil out.

Rent Caps and Just-Cause Eviction: The Tenant Protection Act

When renters look for “the California affordable housing law,” they often mean the Tenant Protection Act, AB 1482. It caps annual rent increases at 5% plus the local change in the Consumer Price Index, or 10%, whichever is lower, over any 12-month period.⁶

The law also creates just-cause eviction protections for tenants who have lived in a unit for at least a year. A landlord must state a specific reason to end the tenancy. At-fault reasons include failure to pay rent or violation of a material lease term. No-fault reasons are limited to four situations: the owner pulling the unit from the rental market, the owner or certain family members moving in, substantial remodeling or demolition, and compliance with a government order.⁶ For no-fault evictions, landlords must provide relocation assistance or a rent waiver, with amounts that can vary locally.

Who Qualifies and How Units Are Allocated

Eligibility for affordable housing in California is tied to area median income, which HCD publishes annually and which varies by county. The standard tiers are extremely low (up to 30% of AMI), very low (up to 50%), low (50–80%), and moderate (80–120%). “Affordable housing cost” for lower-income households means the household pays no more than 30% of gross income toward housing.

How units are handed out varies. Many developments use lotteries, and local governments can set preference categories that move certain applicants up the queue based on factors like displacement history, family composition, or homelessness status. Qualifying for a preference doesn’t guarantee a unit. It improves the position in what is often a long line.

Where the Money Comes From

Affordable housing financing in California combines state budget allocations, federal grants, and tax credit programs. The California Tax Credit Allocation Committee (CTCAC) administers both federal and state low-income housing tax credits. Corporations invest equity in exchange for the credits, and CTCAC ensures the developments stay affordable and habitable for 55 years.⁷

Major state funding for 2026–2027 includes up to $560 million annually in cap-and-invest proceeds directed to the Housing Development and Finance Committee for affordable housing programs, $1 billion in a sixth round of Homeless Housing, Assistance, and Prevention grants, and $1.6 billion expected from Proposition 1 for housing and services for people experiencing homelessness.⁸ Beginning in July 2026, the Behavioral Health Services Act will also set aside 30% of ongoing funding for housing intervention programs.

What Happens When Cities Don’t Comply

The state has become more aggressive about enforcement. Jurisdictions that fail to adopt a compliant housing element receive a Notice of Violation from HCD and have 30 days to respond before HCD escalates the matter, including referral to the Attorney General.¹

Consequences reach further than lawsuits. Noncompliant cities can lose eligibility for certain state funding programs, may be required to submit accelerated four-year housing element updates instead of the standard eight-year cycle, and lose discretionary control over qualifying housing applications: when a jurisdiction falls behind on permits, developers gain the right to use the ministerial approval process for projects meeting basic conditions.² In 2025, the legislature also passed AB 712, adding fines and penalties to enforcement actions against noncompliant jurisdictions.⁹

A Framework That Keeps Moving

California’s housing statutes shift substantially each session. In October 2025 alone, Governor Newsom signed dozens of housing-related bills covering density bonuses, permit streamlining, adaptive reuse incentives, farmworker housing, coastal ADUs, and low-income housing tax credits.⁹ The state has also created a new California Housing and Homelessness Agency and a Housing Development and Finance Committee to coordinate the growing set of programs and funding streams.⁸ If you are checking a rule that affects a lease, a permit, or an application deadline, confirm it against current HCD guidance rather than an older summary.

1
Governor of California. Governor Newsom Issues Final Warning to 15 Communities Violating State Housing Laws
2
ABAG. Frequently Asked Questions About RHNA
3
California Legislative Information. California Government Code 65583
4
California Legislative Information. Senate Bill 423
5
California HCD. Updated Streamlined Ministerial Approval Process
6
California Attorney General. Tenant Protection Act – Landlords and Property Managers
7
California State Treasurer. CTCAC Tax Credit Programs
8
California Department of Finance. Housing and Homelessness – 2026-27 Budget Summary
9
Governor of California. Governor Newsom Builds on This Year’s Historic Housing Reforms