California Set To Pass Statewide Rent Cap And Tenant Protections

Assembly Bill 1482 Awaits Governor Newsom's Signature

Han Li | 09/20/2019

Photo Credit: Han Li

A California bill aiming to protect tenants from huge rent hikes and limit random evictions passed both the state Senate and Assembly, signaling a landmark statewide rent cap, and strengthening of tenant protections.

AB1482, authored by Assemblyman David Chiu from San Francisco, was introduced in February 2019 and now sits on Governor Gavin Newsom’s desk awaiting his signature of approval.

“Keeping renters in their homes is crucial to addressing our housing crisis”, said Chiu, who describes the last-minute passage of the bill as a “historic victory for the millions of renters” and will “hopefully bring California renters some peace of mind and stability”.

Two main restrictions put on the landlords by the bill are: capping the annual rent increase at 5% plus the rate of inflation (up to a maximum rent increase of 10% per year), which would make “rent gouging” illegal; and limiting evictions to applying only to cases where there is a “just cause” for eviction such as dealing drugs or failing to pay rent on time.

Significant exemptions are made in AB1482 to appease the landlord and builders lobbies. The bill will sunset in 10 years, and before that, it will affect mainly apartment and duplex rental properties statewide, while single-family homes that are not owned by big corporations are exempted. In an effort to assuage concerns of the real estate industry that this bill might discourage new housing construction, the bill also exempts rental units that are up to fifteen years old. These exemptions caused the California Apartment Association and California Building Industry Association to withdraw their opposition.

However, the California Association of Realtors (C.A.R.), a powerful group representing real estate interests, still opposes the bill. “Simply put this rent cap would be a bandage on a festering wound and would do nothing to solve the root cause of higher rents”, Jared Martin, the president of C.A.R., wrote in an Op-Ed for CALmatters.

The “just cause” eviction protections continue to anger some landlords. The Bay Area Homeowners Network, a group uniting small individual housing providers who had led a street protest against AB1482, says the bill will make tenants suffer by limiting the market supply, because “owners won't be able to take unforeseen legal risks, so they won't feel as freely to rent out extra spaces”. This concern runs counter to San Francisco’s housing market which continues to see thousands of new units entitled and under construction each year despite having some of the strongest just cause protections for renters in the country.

On the tenant advocates' side, they don’t feel that the bill does enough to protect tenants. Deepa Varma, director of the San Francisco Tenants Union, emphasizes “this bill does not replace or supplant rent control”, because the cap on huge rent increase “only curbs some of the worst excesses”, and asks for more “steps in fighting for stable, affordable homes for all tenants”. Many tenant advocates in San Francisco are concerned about continuing landlord abuses because the bill doesn’t provide for enforcement, or an expanded network of counseling agencies. Some cities such as San Francisco that have had rent caps for many years have tenant counseling and advocacy agencies that protect tenants from landlord abuses, but most areas of the state do not. Even in cities such as San Francisco that have strong rent caps and just cause eviction protections, landlord abuses are pervasive. With so many exceptions in AB1482 meant to appease landlords, many tenants are confused about their rights and protections.

In 2018, the California voters, overwhelmed and misled by a massive $72 million campaign by real estate interests, rejected a ballot measure which would have allowed the expansion of local rent control measures across the State. Now with AB1482 as a moderate first step, tenant rights groups are looking for a second attempt in the 2020 election. The Los Angeles-based AIDS Healthcare Foundation which instigated the 2018 failed initiative Prop 10, is now gathering signatures for the 2020 “California Rent Control Initiative”.

The fate of AB1482 was full of uncertainties until the end of the legislative session. In August, after several rounds of amendments and compromises, AB1482 was originally written to set a higher rent cap threshold and a shorter pilot program period, less aggressive than the current version. Governor Newsom then unexpectedly weighed in to help negotiate, expressing his strong support of making the statewide rent cap a reality. The endorsement from the governor substantially fueled the ambitious rent cap goal of this bill and brought in a wide range of support from both major city mayors and top state lawmakers.

Assuming Governor Newsom doesn’t veto AB1482, California would be the third state to pass a statewide rent law capping rents, following Oregon and New York.