[REN #789] Rental Housing: Say “No” to California Rent Cap Bill

Picture of law library for Real Estate News for Investors Podcast Episode #789

The California Association of Realtors has issued another red alert about rent control legislation that’s gaining support in Sacramento. The association is asking members to speak out against AB 1482 which, it says, will impose rent caps and difficult “just cause” eviction standards on landlords across the state. C.A.R. had previously struck a deal with lawmakers for a more balanced version of the bill, but that deal was tossed out in favor of stricter regulations supported by Governor Gavin Newsom.

The current legislative session ends on September 13th, so state lawmakers don’t have much time to vote. There are several housing and rent control bills under consideration but AB 1482 is the one attracting the most attention. If it passes, it would be the strongest rent control law in the nation.

Impact of AB 1482

AB 1482 would limit yearly rent increases to 5% plus inflation. (1) It would also eliminate the exemption on single-family homes if they are owned by corporations or real estate investment trusts, but would not apply to any home or building that was built less than 15 years ago. The legislation would also establish “just cause” evictions for tenants who’ve lived in a unit for more than six months. And the law would last at least 10 years, until 2030.

That’s a far cry from a version that lawmakers and the California Association of Realtors had agreed to in recent months. Among those provisions was a 7% rent cap plus inflation, “just cause” evictions for tenants renting for at least one year, a rent control exemption for single-family homes and condos owned by an individual, LLC, or trust, and a three-year life span for the law.

C.A.R.’s president Jared Martin said in a statement that the association “supports policies that increase the housing supply for rent and ownership. The proposed version of AB 1482 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 C.A.R., representing more than 200,000 real estate agents and brokers across California, strongly opposes it.” (2)

He said, C.A.R. had been working with bill supporters for several months to come up with a workable solution that balances tenant protections against private property rights. That language is not present in the current version. Because it’s been amended, the bill will need approval from both sides of the state legislature. Lawmakers are also running out of time before the deadline, so getting the legislation approved could be difficult, especially with C.A.R. mobilizing its forces to speak out against the bill.

AB 1482 Won’t Solve the Housing Crisis

According to C.A.R., One of the biggest reasons the bill won’t solve the housing crisis is that rent caps and “just cause” evictions will discourage landlords and developers from doing business in California. The real cause of the problem is not that landlords are raising rents — it’s a lack of affordable housing that would keep rents low. Some housing experts say the root cause goes even deeper, to the gap between the rich and the poor. But neither of those two problems will be solved with rent caps that make it difficult to operate in California as a landlord.

Rent control can provide a short-term fix for tenants who are allegedly just one rent increase away from eviction, but it won’t provide a long-term fix. In order to do that, we need more housing. AB 1482 will do the opposite. It will scare away both landlords and developers.

Developers Afraid to Build in the Bay Area

In fact, there’s an article in Curbed San Francisco that says, developers are afraid to build in the Bay Area. (3) The information comes from a survey by UCLA’s Anderson School of Management, and law firm, Allen Matkins. It offers a few suggestions as to why developers are gun shy about the Bay Area including the impact of potential rent control legislation like AB 1482. Bay Area home prices have also fallen somewhat. The median price for a home in the Bay Area was down 3.1% year-over-year in July to just $950,000. As Curbed points out, the high cost of construction in the Bay Area could also be a factor.

If you want to add your voice to the opposition, you’ll find specific information on how to contact state lawmakers at the C.A.R. website (see link below). Lawmakers could take this up for a vote at any time, but September 13th is their deadline.


(1) California Association of Realtors’ Report

(2) SF Curbed Article

(3) Get Involved: C.A.R Website

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