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California Assembly Passes Statewide Rent-Cap Proposal

Posted by Admin on June 5, 2019
| Location, Property, Real Estate, San Jose News
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The California State Assembly has just passed a statewide rent-cap proposal, reports the Mercury News. If the bill then clears the Senate, it will mean that California will be second state in U.S. to limit annual rent hikes. This year, Oregon became the first state in the nation to pass such a law, setting the state’s rent-cap at 7 percent plus the rate of inflation.

The proposal – Assembly Bill 1482 – passed by 43-28 and is being applauded by tenants’ rights groups. If passed, the California bill will impact millions of properties across California that are not already covered by local rent control rules.

Under the terms of the proposal, landlords will be prohibited from raising rents each year by more than 7 percent plus the annual increase in the cost of living. The new rule, if passed, will apply to most properties that have not previously been covered by local rent control ordinances, including single-family homes and condos.

As we wrote about in a previous post, the proposed rent-cap bill underwent some revisions before it was voted on.

Assemblyman David Chiu, D-San Francisco, the bill’s author, made some concessions to help get the proposal passed. One of those concessions was to move the rent-cap from 5 percent to 7 percent, plus inflation. Assemblyman Chiu also agreed to exempt property owners with no more than 10 single-family homes. In addition, the proposal was amended last week to exempt properties that are less than 10 years old. A final concession was to put a time limit on the law. If passed, it will expire in 2023.

Putting this time limit on the law got the California Apartment Association and the California Association of Realtors, a powerful trade groups that represents landlords, developers, and realtors, on board with the proposal.

The rent-cap bill is modeled after bans that were put in place to prevent rent-gouging after natural disasters. Representatives at UC Berkeley’s Terner Center for Housing Innovation proposed the idea as a middle-ground approach when the debate over stricter rent control laws had become polarizing.

Assemblywoman Buffy Wicks, D-Oakland, said, “It’s a very moderate measure that will guard against some of the more egregious practices that we’re seeing.”

In late March and early April, the market research firm EMC Research conducted a statewide poll that found that 67 percent of California voters and 72 percent of Bay Area voters supported a rent cap of 5 percent plus an annual cost-of-living increase.

In addition, the survey found resounding support among Californians for “just cause” eviction protections, which require landlords to cite a reason for evicting a tenant, such as breaking the law or failing to pay rent, before they can evict, as well as requiring them to provide relocation assistance for tenants.

Related housing bills have also been proposed. Assembly Bill 1481, authored by Tim Grayson, D-Concord, and Rob Bonta, D-Oakland, would extend eviction protections and relocation assistance to tenants. However, in 2018, a similar bill failed by a wide margin.

Senate Bill 50, from Sen. Scott Wiener, D-San Francisco, addresses California’s  chronic housing shortage by proposing to eliminate single-family zoning in neighborhoods near public transit and close to jobs. This bill stalled in the Senate Appropriations Committee when Sen. Anthony Portantino, a Southern California Democrat heading the committee, used leverage to block it from moving to the Senate floor for a vote.

The California Apartment Association is opposed to both of these bills, arguing that they will hinder new housing development.

Currently, 1.5 million of the lowest-income families in California lack access to rental housing they can afford, according to state estimates.

“They are our neighbors. They are our co-workers. They are our brothers and sisters. They are our grandparents,” said Assemblyman Chiu, when he was advocating for Assembly Bill 1482.

Assemblyman Grayson said, “Today’s vote was a clear signal that renter protections are a priority in Sacramento, and we are finally a step closer to providing certainty for the 17 million renters in our state. However,” he added, “rent-gouging protections are not enough when tenants can still be evicted without cause or due process. Renting does not make someone less worthy of a stable home, and I’m committed to continuing to work to ensure that every Californian has a stable and affordable roof over their head.”

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