California’s Legislature Just Passed a Statewide Rent Control Bill

Here’s what you need to know about ”anti-rent-gouging” Assembly Bill 1482

On Wednesday, AB 1482, California’s “anti-rent-gouging bill,” cleared the state Assembly on a 46-22 vote. It now heads to the desk of Governor Gavin Newsom, who is expected to sign it.

Back in May a half-dozen bills aimed at alleviating California’s housing affordability crisis were killed in the Senate, in what has been called the “the worst month in California’s housing policy history.” One of the few stragglers that survived, AB 1482 expands “just cause” eviction protections and adds California to a growing list of states with statewide rent control laws.

Here’s a quick breakdown of how the bill will work, who’s for it and against it, and what it could mean for L.A.:

What will the bill do?

The bill will restrict landlords from raising rents by more than 5 percent plus the Consumer Price Index (which averages about 2.5 percent in the state), so about 7.5 to 8 percent a year. A previous version of the bill, pushed for by the California Association of Realtors, would have increased the allowed percentage to 7 percent (not including the CPI addition), but Newsom negotiated with lawmakers to lower the cap in late August.

In addition to instating rent control, AB 1482 will also require landlords to demonstrate “just cause” before ousting tenants that have lived in an apartment for at least a year. Property owners who wish to evict tenants to build condos or make renovations will also have to pay a relocation fee equal to one month’s rent.

How many homes will it affect?

A report from the Terner Center estimates the bill will impact about 4.6 million households statewide, but those effects won’t be distributed equally. The law will apply to the largest number of single-family homes and apartments in cities with no rent control. In cities that have limited rent control, it will apply to buildings built after 1995, which have long been exempted from rent control by the state’s controversial Costa-Hawkins Act.

Who is exempt?

Lobbying from real estate interests exempted a number of homes from the bill. AB 1482 will not apply to units that opened in the last fifteen years, or single family homes, unless they are owned by a real estate investment trust, a corporation, or an LLC in which at least one member is a corporation. Duplexes where the owner lives in one of the units are also exempt.

 How will it impact L.A.?

Since Los Angles already has rent control on units built before 1978, the bill will apply to the narrow margin of homes built between 1978 and 2009, or about 1.2 million more homes in Los Angeles County.

 Is it permanent?

No. The bill is set to sunset January 1, 2030, unless lawmakers extend it.

Who is against it?

The California Apartment Association spent tens of millions of dollars to oppose the bill, claiming that it would discourage landlords from entering the market. “[It] would create a huge disincentive to invest in rental housing at a time when California so desperately needs more homes,” warned the association. At the last minute it agreed to drop its opposition to the bill, but the California Association of Realtors—stung by the August defeat on the 7 percent cap—remained an opponent.

Who supports it?

It’s complicated. While a number of tenants’ rights groups initially supported the deal and have praised its ability to protect renters from the most egregious hikes, many have critiqued the “watered-down” version that emerged after lobbying and amendments. Some advocates say that without vacancy control—which stabilizes a unit’s rent even after a tenant moves out—it will do little to quell rising rents overall.

The Los Angeles-based AIDs Healthcare Foundation is collecting signatures for a stronger rent control initiative that would go on the ballot in 2020 and seek to modify the state’s controversial Costa-Hawkins Act.

What happens next?

To officially pass, the bill will need to be signed into law by Newsom by a mid-September deadline.

UPDATE: This article previously stated that single family homes owned by “mom and pop” landlords who rent out ten or more units are exempt from the bill. It has been updated to say that all single family homes—except those owned by a real estate investment trust, a corporation, or an LLC in which at least one member is a corporation—are exempt. 

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