California Legislature passes rent cap bill

California State Capitol Sacramento USA

A statewide bill that caps rents was passed by the California Assembly on Wednesday and now heads to Gov. Gavin Newsom’s desk for approval. The Senate had already passed AB 1482 earlier in the week.

The legislation by Assemblyman David Chiu, D-San Francisco, will cap annual rent increases at 5 percent plus the rate of inflation—currently about 8 percent—for much of the state’s multifamily housing stock, and is estimated to affect 2.4 million apartments. The bill also will apply “just cause” eviction policies to qualified housing across California.

The bill’s rent cap will mainly affect properties that are 15 years of age or older, contain two units or more, and are not already subject to local rent control ordinances. The legislation, however, will not interfere with local rent control laws, which remain under the purview of the Costa-Hawkins Rental Housing Act.

The legislation also doesn’t apply to single-family homes, townhouses and condos, except when owned by corporations or REITs. It also will exempt duplexes when one unit is occupied by the owner.

The legislation will take effect in January 2020 and sunset in 2030. California would become the second state to pass a rent cap. Oregon enacted a rent cap last year.

The California Apartment Association (CAA) fought for amendments to the bill leading up to this week’s votes. CAA’s Deb Carlton said, “The California Apartment Association leadership thought it important to be part of the solution. We now, of course, need to address the largest issue facing the state, which is the production of affordable housing. While this Legislation is a temporary solution, we must get serious about moving forward on production, which is the only way we address our housing crisis.”

The National Multifamily Housing Council’s Doug Bibby agreed, saying,“The most effective way to fix California’s housing crisis is by building more housing across a range of price points and AB-1482 makes that harder to do. After Californians overwhelmingly rejected the rent control ballot initiative less than a year ago, lawmakers today went against their constituents by passing a measure that will discourage investment, shrink the availability of affordable housing that already exists and squeeze even more people struggling in the housing market. This makes the problem worse. The housing affordability crisis is real, real Americans are being harmed by it every day and we need real solutions—not restrictive policies that we know don’t work.”