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Real Estate

California enacts statewide rent control

Newsom calls it the “nation’s strongest statewide renter protections”

During a ceremony Tuesday at a senior citizen center in Oakland, California, Gov. Gavin Newsom signed a statewide law that controls how much landlords can charge for rent. Starting in 2020, the law caps annual rent increases to 5% plus inflation.

The governor called Assembly Bill 1482 the “nation’s strongest statewide renter protections.”

With Newsom’s signature, California became the second state in the nation to pass a rent cap. Oregon passed a similar law in March.

In addition to controlling rent increases, the California law requires landlords to have “just cause,” such as failure to pay rent, before terminating a lease. That will prevent property owners from evicting tenants to rehab units and boost rents.

The signing ceremony in Oakland kicked off a series of multi-city events the governor’s office called a “rent and housing tour” aimed at bringing attention to California’s shortage of affordable housing. In many areas of the nation’s most populous state, median rents are more than double the national average, according to RentCafé.

The purchase market is expensive, too. The median price of a home in California this year probably will be $593,200, more than double the U.S. median price, according to a forecast from the California Association of Realtors. Only about a third of the state’s population can afford to buy a median-priced home, the group said.

The California Rental Housing Association, representing more than 22,000 rental property owners, issued a statement in opposition to the rent-cap law.

“It is unfortunate that political expediency won over a comprehensive housing solution that will actually move the state closer to the Governor’s goal of creating 3.5 million new housing units,” the statement said.

The new law was also opposed by the National Multifamily Housing Council, National Apartment Association, Mortgage Bankers Association, California Mortgage Bankers Association, and other housing and mortgage industry groups.

When the new law goes into effect in January it will roll back any rent increases that occurred after March that are above the allowed caps. But no-fault evictions that happen in that time cannot be rolled back, which prompted some landlords to evict low-paying tenants so they could raise rents on their units, according to the Los Angeles Times.

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