Cap on annual rent increases clears key California hurdle

SACRAMENTO, Calif. (CN) — The rent, many California lawmakers agree, is too damn high.

The phrase appeared often during a Thursday hearing as Assembly members examined a bill that would further cap allowable rent increases, include single-family homes in tenant protections and remove an existing sunset to the Tenant Protection Act of 2019.

Over 100 people favoring and opposing the bill spoke during the Assembly Housing and Community Development Committee, which passed Assembly Bill 1157. The legislation now proceeds to the Assembly Judiciary Committee.

Supporters cheered as they watched the committee move the bill to its next stop along the legislative process.

“It is something that we need to address,” said Assemblymember Matt Haney, a San Francisco Democrat and committee chair, of the state’s housing crisis.

The bill’s author — Assemblymember Ash Kalra, a San Jose Democrat — said people continue to struggle with rent, despite the 2019 law. That law imposed an annual limit on rent increases to 5% plus the percentage change in the cost of living, or not greater than 10%, whichever is lower. Additionally, landlords must have a justifiable reason for terminating a tenancy after a year.

Single-family home rentals currently are exempt from existing law, which sunsets Jan. 1, 2030.

Kalra’s bill would reduce the cap on rent increases to 2% plus the percentage change to the cost of living, with a maximum of 5%, whichever is lower. It also would include single-family homes, currently not protected by the 2019 law, as well as make the law permanent.

Tammy Alvarado with the Alliance of Californians for Community Empowerment said her rent has ballooned over a few years from about $1,500 a month to almost $2,800.

“Unless something changes, becoming homeless is a reality for our family,” she said.

Rental and building industry representatives opposed the legislation.

Debra Carlton, with the California Apartment Association, pointed out that voters over the past several years have rejected rent control measures at the ballot box. Karim Drissi, with the California Building Industry Association, said local governments already can impose rent control.

Some committee Democrats expressed skepticism about the bill.

Noting she’s been involved in housing issues for 30 years, Assemblymember Anamarie Ávila Farías, a Martinez Democrat, said lawmakers should be strategic and outcome-driven in their policymaking. She feared the bill would cause more harm than good.

“Rent control reduces housing supply,” she added.

Assemblymember Lori Wilson, a Suisun City Democrat, said that capping rent would exacerbate the state’s housing problems.

Other Democrats favored Kalra’s approach.

“The rent is too damn high,” said Assemblymember Buffy Wicks, an Oakland Democrat. “It’s also too damn hard to build.”

Like the opponents, Wicks also referenced the three attempts at the ballot box to create rent control. However, she opted to support the bill Thursday, as it’s just starting its legislative journey.

Assemblymember Alex Lee, a San Jose Democrat and renter of a single-family home, said the American dream once included a stable 30-year mortgage. Now, renters face the prospect of rising rents each year.

“Frankly, the rent is too damn high,” he said, adding later: “You can still increase the rent, but there’s a modest rate of return.”

Hours after helping Kalra advance his bill, Lee presented legislation of his own: Assembly Bill 11, the Social Housing Act. It also passed and now proceeds to the Assembly Appropriations Committee.

The bill would create the California Housing Authority, which would facilitate the construction of social housing.

Lee said it’s a model used in other countries and in some states. It’s publicly backed and includes people of different income ranges. It can’t be sold to a private, for-profit entity and residents have the same protections as private property tenants.

Lee argued that the state can’t rely on the private market to provide the housing California needs.

“If we rely on the profit motive, it cannot simply happen,” he added.

Lee has tried to get a social housing bill passed into law before. On two different occasions the bills died in committee, and a bill reached the governor in 2023 but was vetoed.

“While I appreciate the author’s commitment to build more affordable housing in the state, this bill creates new additional cost pressures and must be considered in the annual budget in the context of all state funding priorities,” Governor Gavin Newsom wrote in a statement at the time.