California has become the third state in the nation to pass rent control legislation.
On Tuesday afternoon, Gov. Gavin Newsom signed into law the sweeping measure, which aims to strike at the heart of California’s housing crisis.
Assembly Bill 1482 sets rent caps and implements “just cause” eviction rules meant to combat rent gouging and landlords who force tenants to vacate in order to raise the rent on a unit.
The governor signed the measure — dubbed the “Tenant Protection Act of 2019” — into law at a ceremony in Oakland. California now joins New York state, which passed sweeping rent reform measures in June; and Oregon, the first to adopt statewide rent control legislation.
Newsom told the crowd assembled for the signing at a senior center in Oakland that the rent control measure was about “protection.” But he said more work is needed, including “preserving existing housing stock against gentrification.” And he added, “Production. We need to build more damn housing.”
Under AB 1482, landlords must limit annual rent increases on apartment buildings that are 15 years or older to no more than 5 percent plus annual inflation. Inflation is typically between 1.5 percent and 3.5 percent. In Los Angeles County, rent prices jumped to an average of $2,320 per month amid growing demand, according to a Marcus & Millichap report over the summer.
Landlords will now also be required to pay relocation assistance to tenants evicted from regulated units unless they meet certain “just cause” criteria, including a breach of a lease or failure to pay rent.
The rent cap and “just cause” rules apply to those apartments that are not already subject to local rent ordinances, such as those in Los Angeles. The new rules take effect Jan. 1, and will expire in 2030, but state lawmakers are expected to extend the measure, industry pros said.
The California Apartment Association — the nation’s largest statewide group representing landlords — successfully lobbied to have AB 1482 remain in effect past its initially planned three years, arguing that a longer term would create more certainty for investors.
While the CAA did not officially endorse AB 1482, it dropped its opposition to the bill by the time the legislature had approved it last month, after having secured a longer sunset period and a handful of other concessions.
Mike Nemeth, a spokesperson for the group, said while the organization didn’t like the bill, it was able to “get it to a point where our members can live with it.”