California Passes Statewide Rent Control

As anticipated, California Governor Gavin Newson signed Assembly Bill 1482, which limits landlords from raising rents too high and protect renters from evictions without cause.  Known as the rent control bill, thought lawmakers don’t like the term, will be in affect January 2020.  The bill will limit the annual rental increase to 5% plus the rate of inflation.  The bill will expire in 2030.

This bill comes at a time where California is seeing an increase in homelessness.  According to a lawmaker who authored the bill, many renters are one increase away from not making rent.  With the bill in place, it will affect about 8 million renters.  Unfortunately, there are many exceptions in the bill therefore it only overs about half of the 17 million renters in California. 

The law would not apply to housing built within the last 15 years.  This is because lawmakers are hoping this will encourage developers to continue to build, as housing availability is scarce.  It also does not apply to single family homes, except those owned by corporations or investment trusts.  It also does not cover areas in which rent control already exists, like Los Angeles and San Francisco.

Previously, landlords could raise the rent – in rare cases, over 150% - as long as they gave advanced notice.  And even then, the landlord can evict tenants in order to raise the rent for a new tenant.

Passing of this bill, however, meant putting another one on the back burner.  The legislation that got shelved was one to assist in encouraging builders.  As mentioned earlier, housing availability is scarce in California.  Senate bill 50 would ease zoning regulations and spur construction.  Many opponents of the rent control bill said putting rental caps doesn’t solve the homelessness problem.  Low inventory of available housing and a rising demand brings the cost of rent higher. 

Currently, only Oregon and California have statewide rent control.