Rent Cap Bill Sails Through California Senate

(CN) – A bill aimed at curtailing California’s escalating rent prices passed the state Senate on Tuesday, putting it one step closer to Gov. Gavin Newsom’s desk.

Assembly Bill 1482, the Tenant Protection Act, seeks to limit annual rent increases to 5% for all buildings more than 15 years old. State senators passed the bill 25-10, a wider victory than some expected.

Newsom has pledged his support for the bill and is expected to sign it once it passes the Assembly.

“California is at the doorstep of enacting strong, statewide renter protections – safeguards that are critical to combating our state’s housing and cost-of-living crisis,” Newsom said in a statement after the vote.

Newsom is among those who believe rent controls are needed to address affordability problems in many communities throughout California, where rent prices have risen sharply since the country exited the Great Recession in the early 2010s.

However, some believe rent control is a bandage and a not particularly effective one, saying the real solution to easing prices is to increase supply by building new housing.

“Rent control is not the answer to our housing shortage,” said Sen. Steve Glazer, D-Contra Costa.

Glazer believes such measures will do little to stabilize pricing in the short term and may have compounding effects in the long term. Critics say such restrictive laws could discourage developers from building housing units, thereby continuing to drive a low-supply and high-demand cycle that results in higher prices.

But most of Glazer’s Democratic colleagues disagree.

Many said the bill is necessary to stop unscrupulous landlords from cashing in on price spikes by gouging their tenants or by evicting them to raise the price significantly for the next occupant.

“Renters – who work in our schools, hospitals, small businesses, and emergency services – deserve to be protected from egregious rent increases and capricious evictions that could leave them homeless,” said state Senate President pro tem Toni Atkins, D-San Diego.

The bill must clear the Assembly, but its prospects look good. It was written by Assemblyman David Chiu, D-San Francisco and Assembly Speaker Anthony Rendon has signed off as well.

It’s unlikely that enough Democrats will flee the party line to scuttle the legislation’s chances. However, some lawmakers on both sides of the aisle have expressed discontent with the legislation, saying big business will find a way to get exemptions, while smaller mom-and-pop landlords will be hindered from being able to raise rents to meet expenses.

The bill also ties allowed increases to the Consumer Price Index, which rises an average of 2.5% annually. If the CPI rises by its average, a landlord could only raise prices by 7.5%.

The legislation also contains just-cause protections for tenants, meaning they cannot be evicted for any reason by fickle landlords looking to cash in. Those protections only apply to tenants who have occupied a qualified rental unit for at least a year.

“Keeping renters in their homes is crucial to addressing our housing crisis,” Chiu said.

The law contains a sunset clause for 2030, at which time the rental landscape can be revisited. The Terner Center for Housing Innovation at the University of California, Berkeley, identified rent caps and renter protections as two tools to address the state’s housing crisis, but has also called for more housing.

In July, the center released an analysis that found rent caps and protections would not significantly curtail housing creation.

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