California Lawmakers Pass Sweeping Rent Cap Bill in Major Win for Tenants

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A large "rent" banner is posted on the side of an apartment building in San Francisco. If the state Assembly approves a new rent bill by Friday, it would cap most housing rental increases at 5% a year plus inflation.  (Justin Sullivan/Getty Images)

Updated Wednesday, Sept. 11, 5 p.m.

California lawmakers on Wednesday moved to cap annual rent increases statewide for most tenants, a major victory for tenants as limited housing supply in the country's most populous state continues to drive up the cost of living while pushing more people to the streets.

A day after its approval by the state Senate, members of the Assembly voted 46-22 in favor of AB 1482 , which caps rent increases at 5% each year, plus inflation, for the next decade while banning landlords from evicting tenants without just cause.

Democratic Gov. Gavin Newsom has said he supports the measures and is expected to sign it into law.

California's largest cities, including Los Angeles, Oakland and San Francisco, have some form of rent control that has been in place for decades, but a state law passed in 1995 has restricted any new municipal rent control laws since that year. In most places, landlords can raise rents at any time and for any reason as long as they give advance notice.

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California voters overwhelmingly rejected a statewide ballot initiative to overturn the 1995 law last year.

In Pomona, about 30 miles east of Los Angeles, Yesenia Miranda Meza said her rent has jumped 20% in the past two years. On Monday, she marched with other tenants through the halls of the state Capitol chanting, "Once I've paid my rent, all my money's spent."

"I'm a rent increase away from eviction, and that's with me having two jobs," she said. "So if this (bill) doesn't go through and I get another rent increase, I really don't know what I'm going to do. I'm either going to be homeless or I'll have to cram into a room with a whole bunch of other people."

Opponents have likened the proposal to rent control — a more restrictive set of limitations on landlords.

Jared Martin, president of the California Association of Realtors, said the group's 200,000 members strongly oppose the bill because it will "reduce the supply and quality of rental housing." It's an argument echoed by state Sen. Jeff Stone, R-Temecula, who said developers would have no reason to build new housing if they can't make money off their investment.

"We'll see even a greater housing crisis because of the low supply of housing," Stone said. "Either this will force our constituents to join a 60,000 homeless population that we see in the LA area, or they will simply just move to another state."

But supporters say the bill includes lots safeguards to prevent that from happening. The rent caps don't apply to housing built within the last 15 years — a provision that prompted the California Building Industry Association to drop its opposition.

Plus, the caps don't apply to single-family homes, except those owned by corporations or real estate investment trusts. And duplexes where owners live in one of the units are also exempt.

The measure would sunset in 2030.

"We all desperately want to build more housing. It was a very important aspect of this bill," said Democratic Assemblyman David Chiu of San Francisco, who introduced the legislation.

State Senate Leader Toni Atkins, a San Diego Democrat, said the high cost of rent is hurting working people throughout the state.

"Where I grew up, if I had a career as a nurse or teacher, that would have been making it in life," she said. So how do you have a good career and you’re making it and you can’t afford the rent?"

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But even some Democrats who voted for the bill noted that they had serious reservations about it. Sen. Steve Glazer, a Democrat representing much of Contra Costa County, cited a 2018 study by Stanford University finding that landlords under rent control are more likely to nudge tenants out by spending less on maintenance.

"Any time you reduce rate of return on an investment, you make that investment less attractive, and this is true even if (the) new investment is exempted for 15 years as this bill does," he said.

But Carolyn Wilson, a 71-year-old Sacramento resident, said she needs help now. She said her rent has increased about $100 each year and her landlord just gave her a 60-day notice to move out without offering an explanation.

"All I do is get up on the computer looking for some place to go," she said. "With my income, I can't afford anything."