De-facto rent control is coming to California thanks to AB-1482 getting approved in the California State Senate.

Assemblyman David Chiu’s bill got the votes that it needed and will soon be signed by Governor Newsom who has been eager to pass some form of rent control this year following the loss of Proposition 10 in last year’s elections.

What Is AB 1482?

With AB 1482, rent increases are capped at 5% plus inflation until 2030 but these caps will not apply to single family homes and apartments that have been built in the last 15 years that are not owned by trusts or corporations or duplexes where the owner lives in one of the units.

“This really is an anti-gouging cap and that is its effect,” said Elizabeth Kneebone, the Terner Center’s research director. “It would not affect the majority of rent increases.”

Still, the bill could have consequences beyond extending protections for renters. Brian Asquith, an economist with the Michigan-based Upjohn Institute, said landlords who might have held rents for existing tenants at below-market rates with the knowledge they could increase them at any time might decide to hike rents every year.

“If you talk to people on the ground there’s almost universal consensus this occurs,” said Asquith, who has studied California’s rent regulations.

Asquith also pointed to research that says restrictions on rent hikes encourage owners to convert their apartments into condominiums, which removes properties from rental stock. He expects that could happen in wealthy suburban communities that don’t have rent restrictions.

What’s Next for The Rental Market?

Will it help or hurt California’s rental market? The answer to this question is yes and no. Yes, it’s expected to have a limited impact on the states rental market but it doesn’t address the need for more rental housing construction in a state that’s in dire need of housing.

Everyone from our states elected officials, to those people who are on the ground searching for housing know that California needs housing badly but with strict environmental and development laws it’s unlikely that we will see any major changes in the states housing market in the coming years.

Contact 36 North Property Management

To learn more about the State of California’s rental market, or to speak with us about our property management services, contact 36 North Property Management by calling us at (831) 484-4604 or click here to connect with us online.