The First Stab at Statewide Rent Control in California


The First Stab at Statewide Rent Control in California

It’s official; the state legislature is pursuing statewide rent control.

This comes as no surprise since Governor Gavin Newsom, at his “State of the State Address” in February, in front of his colleagues and cameras, announced, “bring me a good bill on rent stabilization, and I will sign it”.  What will it look like?  I think the statewide rent control recently passed by the State of Oregon provides a good indicator.  Here are the details of their new law:

– Rents are capped at 7% over Consumer Price Index (CPI)
– If a tenant has resided in a property for more than 1-year, they can only be evicted with “just cause” such as committing a crime or non-payment.
– For owners of 5 or more units, if an owner wants possession of the property, they must give the tenants 90-day notice and pay one month’s rent to the tenant as relocation assistance.
– Owners with 4 or fewer units are exempt from this relocation assistance and longer notice period.
– Local cities can still implement more stringent rent control measure.

At first blush, these restrictions don’t seem too restrictive.

But how many of you believe this is the last rent control law to pass in Oregon?  California lawmakers could not respond quick enough with their own measure to protect tenants from increases in rents and displacement from their rentals.  Four measures are currently being floated in the California legislature to address tenant concerns and provide more tenant protections.  Here are the four bills:

– AB36: All properties would be subject to rent control if they are older than 10-years (2009 and earlier) but it would exclude owners who own 2 or fewer units.  This is a workaround the Costa-Hawkins law currently in effect, which allows rent control measures to impact only multi-unit buildings (2 units or more) built before 1995.
-AB724: This bill forms a statewide rental property owner registry.  This may be necessary so tenants would know which owners under AB36 would be subject to rent control.
-AB1481: Just cause eviction would apply to all tenants for all properties.
-AB1482: Rent increases would be limited to 6% over CPI.

These proposals will be debated between the Assembly and Senate before a final bill is voted on and submitted to the Governor.  The final rent control measure and restrictions may look very different between now and when the bill is voted upon.