Statewide Rent Control Bill Passes Assembly While Tenant-Unionizing Bill Fails in Senate

The State Assembly voted Wednesday to impose statewide rent control by capping rent increases. Assembly Bill 1482 would prohibit landlords from raising rent by more than 7 percent plus inflation over the course of a year.

The bill, by Assemblyman David Chiu (D-San Francisco), is headed to the state Senate, but received 31 “no” votes from Assembly members from both political parties. It could have difficulty passing in the Senate.

San Francisco, where Chiu hails from, has rent control. “The annual allowable increase amount effective March 1, 2019 through February 29, 2020 is 2.6%. The annual allowable increase amount effective March 1, 2018 through February 28, 2019 is 1.6%,” according to the Rent Control Board.

“This is a disincentive for people to build and what we need is to build,” said Assemblywoman Melissa Melendez (R-Lake Elsinore).

California voters soundly defeated a ballot measure in November 2018 that would have allowed for rent control in every city across the vast state.  Proposition 10 would have repealed the Costa-Hawkins Rental Housing Act, which limits the use of rent control in California.

However, rent control advocates vowed to soldier forward, and Gov. Gavin Newsom announced that he had plans to make a deal on new rent control policies when he took office. “We need new rules to stabilize neighborhoods and prevent evictions, without putting small landlords out of business,” Newsom said during his State of the State address. “I want the best ideas from everyone in this chamber. Here is my promise to you, get me a good package on rent stability this year and I will sign it.”

SB 529, a similar tenant-unionizing bill would also have capped rent increases, but failed to pass in the Senate. SB 529 would also have allowed California tenants to withhold payment in protest when a landlord raises the rent beyond the rate of inflation.

Chiu’s bill was stalled last month until he amended it to allow annual rent increases from 5 percent up to 7 percent, plus the rate of inflation, and has a sunset date of 10 years. “Just as the bill gives renters stability, we are providing landlords stability as well by including a sunset date in the bill,” San Francisco Democrat David Chiu said in a statement. “We also want to be sure that this legislation does not deter housing production, so we will be exempting new housing units up to 10 years old.”

The rent cap will apply to most California rental properties, other than new construction.

There is nothing in the bill to prevent the 7 percent rent cap from being lowered in the future.