Rent Control: could it end up hurting renters instead?

SAN DIEGO (KUSI) – California will limit rent increases for some people over the next decade after Democratic Gov. Gavin Newsom signed a law aimed at combating a housing crisis in the nation’s most populous state.

The law limits rent increases to 5% each year plus inflation until Jan. 1, 2030. It bans landlords from evicting people for no reason, meaning they could not kick people out so they can raise the rent for a new tenant. And while the law doesn’t take effect until Jan. 1, it would apply to rent increases on or after March 15, 2019, to prevent landlords from raising rents just before the caps go into place.

California and Oregon are now the only places that cap rent increases statewide. Oregon capped rents at 7% plus inflation earlier this year.

California’s rent cap is noteworthy because of its scale. The state has 17 million renters, and more than half of them spend at least 30% of their income on rent, according to a legislative analysis of the proposal.

But California’s new law has so many exceptions that it is estimated it will apply to 8 million of those 17 million renters, according to the office of Democratic Assemblyman David Chiu, who authored the bill Newsom signed.

It would not apply to housing built within the last 15 years, a provision advocates hope will encourage developers to build more in a state that desperately needs it. It does not apply to single family homes, except those owned by corporations or real estate investment trusts. It does not cover duplexes where the owner lives in one of the units.

And it does not cover the 2 million people in California who already have rent control, which is a more restrictive set of limitations for landlords. Most of the state’s largest cities, including Los Angeles, Oakland, and San Francisco, have some form of rent control. But a state law passed in 1995 bans any new rent control policies since that year.

Senior Advisor for SVN Vanguard, Jarrett Smith, stopped by Good Morning San Diego to explain why he believes rent control could end up hurting renters instead of protecting them.

“Rent control discourages new development of affordable rental housing and the lack of supply drives the rental prices up. Only way to solve the housing problem is to build more affordable housing,” said Smith.

Categories: Good Morning San Diego, In Studio Guests