Governor and Legislative Leaders Reach Agreement on Rental Cap Legislation

Governor Gavin Newsom, Senate President pro Tempore Toni Atkins, Assembly Speaker Anthony Rendon and Assemblymember David Chiu on Friday reached agreement on protections against large rent increases.

The legislature will still need to approve AB 1482 in the coming weeks.  If passed it would cap rent increases statewide to a 5 percent annual increase plus inflation over the next decade.

The legislation also includes provisions to prevent some evictions without landlords first providing a reason.

“The high cost of housing and rising rents are preventing California families from getting ahead. These steep housing costs drive inequality and threaten to erode California’s economic growth,” the group that includes Governor Gavin Newsom, Senate President pro Tempore Toni Atkins, Assembly Speaker Anthony Rendon and Assemblymember David Chiu said in a joint statement on Friday.

“We are pleased to announce we have come to an agreement on a series of amendments to AB 1482 that would create strong renter protections,” they said. “The bill will protect millions of renters from rent-gouging and evictions and build on the Legislature’s work this year to address our broader housing crisis.”

“As our homelessness crisis worsens, it is crucial we take steps to keep families in their homes,” the bill’s author, Assemblyman David Chiu, D-San Francisco, wrote in July. “This legislation will protect renters from egregious rent increases and predatory evictions while still allowing landlords to turn a profit. Today’s vote shows there is strong momentum in the legislature for increasing protections for California renters.”

The announcement marks a huge change in the debate over the month.  The California Association of Realtors had previously agreed not to oppose a weaker version of the bill.  But that version would have only capped rents for a shorter period of time and at a higher percentage.

The new bill brings the legislation back to an earlier version that was strongly opposed by the realtor group, which now strongly opposes the legislation and will lobby lawmakers in an effort to kill it.

In a statement from association President Jared Martin, “(The bill) will not incentivize production of rental housing or help more people find an affordable place to live. It discourages new rental housing, which is why CAR, representing more than 200,000 real estate agents and brokers across California, strongly opposes it.”

One of the driving forces behind the stronger cap is Governor Newsom, who told reporters a few weeks ago that they wanted stricter caps in the bill.

Meanwhile, the California Apartment Association has come out in favor of the bill after previously opposing it.

“We applaud the governor for temporarily finding a solution for tenants,” said Deb Carlton, the California Apartment Association’s senior vice president. “Now we must get serious about moving forward on production, which is the only way we address our housing crisis.”

One reason for that change in position is the rental caps would not apply to those properties built in the last 15 years, nor would they apply to single-family home rentals unless they were owned by large corporations.

The bill would not affect apartments already under rent control; however, they would extend caps to apartments in those cities not covered by the existing local measures.

The agreement comes less than a year after voters rejected a ballot measuring that could have expanded local rent control policies across the state.  Those restrictions would have been much tighter than those passed under AB 1482.

The governor opposed that ballot measure, but has indicated he wants to sign a package of rent stabilization bills if the legislature agrees.

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