California Senate OKs cap on annual rent increases
California’s escalating housing costs have yielded epic commutes and a rising tide of homelessness. Now they are close to producing a political milestone: a vast expansion of tenant-protection laws that would cap rents statewide.
On Tuesday, the state Senate voted to advance Assembly Bill 1482 to limit rent increases to 5% a year plus a cost-of-living adjustment. The state Assembly, the Legislature’s lower house, could give final approval as early as Wednesday, though passage is uncertain.
The legislation is the latest in a series of measures that have swept through state and local governments this year to regulate rents and strengthen tenant rights. For decades, such provisions have been mostly limited to a relative handful of apartments in the nation’s big cities.
“Passing tenant legislation in Sacramento is incredibly difficult,” said Assemblyman David Chiu, D-San Francisco, who is the bill’s author. “But we’re in the midst of the worst housing crisis in our state’s history, and I think my colleagues and policymakers understand we have to do something differently.”
The signs of that crisis include the nation’s steepest home prices and the highest state poverty rate once housing costs are figured in. In recent years, state and local governments have allocated several billion dollars to encourage subsidized affordable housing, only to see California’s homeless ranks swell.
All this has opened the door for rent control, historically a lost cause in Sacramento but a legislative priority of Gov. Gavin Newsom in his first year in office. Newsom, a Democrat, was previously mayor of San Francisco, where the housing pinch has been particularly acute.
The bill is technically an anti-gouging measure that borrows language from the typically short-term price caps imposed after disasters like fires and floods. It would extend price protections to an estimated 8 million tenants, though only a small fraction now face annual rent increases in excess of the bill’s limit.
“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 after the Senate vote.
Normally a leader in progressive politics, California is something of a follower in this case. Earlier this year, Oregon limited rent increases for most tenants to 7% annually plus inflation. In New York, state lawmakers significantly strengthened regulations that dictate the rents of almost half of New York City’s rental stock and allowed other cities to impose their own rent caps.
Most states have laws that explicitly ban rent control, a century-old mechanism that has divided tenant activists, who argue that it is the most cost-effective way to quickly curb housing costs, and economists, who largely agree that it constrains the long-term housing supply. Only four states — California, Maryland, New Jersey and New York — have localities with rent control, along with Washington, D.C.
But the idea of rent control is gaining steam, fueled by a far-reaching network of tenant unions and others organizing efforts to combat displacement and skyrocketing rents.
Washington, Colorado, Illinois and Florida are among the growing number of states where lawmakers are considering rent-control legislation.
“It’s a way to confront the gentrification seeping across the country,” said Kamau Walton, a national organizer at the Right to the City Alliance, a national coalition that supports universal rent control. “Even in smaller towns, gentrification is definitely becoming an issue. And rent control is one of the ways people are pushing back.”