There might be a limit on how much a landlord can raise your rent if new legislation is signed by the governor.
An Assembly bill from a San Francisco Democrat would stop landlords from raising rent more than 5 to 10 percent in a year. It’s not exactly the type of rent control that many activists want, but it may stop some of the more extreme rent hikes endured by many San Diegans.
The legislation, AB 1482, passed through the Assembly’s Housing and Community Development Committee last month. It will be heard Wednesday by the Appropriations Committee, where it could go on to a vote in the full Assembly. If it passes, it would go to the Senate and then the governor’s desk.
Under the bill, a landlord would be prevented from raising rents 5 percent plus whatever the rate of inflation was the previous 12 months (as measured by the Consumer Price Index). The CPI rate for San Diego metro was 2.2 percent for the year in March 2019, so a local landlord could not raise rates more than 7.2 percent.
Given the current rate of inflation, if a San Diegan rents an apartment for $1,200 a month, the landlord could not increase the monthly rate more than $86 in 12-month period.
It does not seem like the legislation will have a gigantic effect on San Diego County at the moment. Asking rents are up 2.7 percent in a year, said real estate tracker CoStar. Although, rents were up 7.5 percent annually in the third quarter of 2015.
Assemblyman David Chiu, the author of the bill, said the point of the legislation is to protect renters who are at risk for homelessness, or who are not able to provide for their families, after a big rent increase. He calls the legislation an “anti-rent-gouging” bill, as opposed to “rent control.”
“Most of California, 17 million tenants, don’t have safe and secure affordable housing” he said Tuesday. “In recent years, we’ve seen rent increases of not just 10 or 25 percent, but 50, 100, 200 percent rent increases.”
Chiu said his bill has it roots in the state’s anti-price gouging law that prohibits raising the price of goods and services more than 10 percent after an emergency has been declared, typically a natural disaster. He said the state is undergoing a type of emergency now with record numbers of homeless and affordability issues.
The business community is largely opposed to the bill, with much of the support coming from organized labor and tenants rights groups.
So far, the California Association of Realtors, California Chamber of Commerce and California Apartment Association are opposed. In support: ACLU of California, California Teamsters and Housing California.
Molly Kirkland, public affairs director for the Southern California Rental Housing Association, said it opposes the bill because of concern that the benchmark — 5 percent plus inflation — would be lowered in the future.
“Our concern is that will be chipped away over time,” she said.
Similar to concerns with other rent control bills, opponents have argued a limit on rent increases would make developers not want to build more apartments. That lack of new housing, they argue, would end up hurting low-income people trying to find affordable places to live.
“For me, it is rent control by a different name,” said Borre Winckel, CEO of the Building Industry Association of San Diego. “The net effect, if such a bill were to become law, is reduced construction.”
Chiu said his legislation is not rent control because it would still allow for increases. He said the roughly 7 percent increases means a property owner can still get a return on investment while still protecting renters from substantial hikes. If inflation is higher than recent norms, the law will stop landlords from raising rent more than 10 percent. The inflation rate has not been more than 6 percent nationally since 1990.
AB 1482 is just one of a number of bills out this year aimed at tackling California’s lack of housing and affordability concerns.
Governor Gavin Newsom released a statement after AB 1482 passed the Assembly’s housing committee that he was grateful lawmakers were moving forward on addressing housing affordability by creating a renter protection package.
“Vulnerable residents – seniors, families with small children and people on a fixed income – shouldn’t have to live in constant fear of eviction,” he wrote. “And people across this state shouldn’t be forced to spend their whole paycheck to keep a roof overhead.”
San Diego Assemblyman Todd Gloria, and a mayoral candidate, issued a statement after he voted for AB 1482 saying working and middle class Californians were being crushed by rent gouging.
In November, a proposition that would have allowed for expanded rent control in California was defeated with 62 percent of voters opposing. Proposition 10 ended up being a very costly battle with some of the nation’s largest landlords — such as Blackstone, Essex Property Trust and Avalonbay Communities — spending millions to defeat it.
One of the most closely watched is Senate Bill 50, which would allow increased density around transit stops. It will be heard by the Senate Appropriations Committee on May 13.
San Diego metro area is the hardest place for renters in California, said a new study from the University of Southern California.
San Diego was ranked as the second-least affordable places for renters out of the 50 largest metro areas, behind Washington, D.C. The study compared the change in income and rent from 2000 to 2016, adjusted for inflation, and then broke it down by what San Diegans were paying at different income levels.
Traditionally, affordability studies focus on the average income of an area compared to the average rent. One of the issues: Places with some really high salaries tend to skew the data so places like San Francisco look affordable on paper, while the plight of the lowest earners aren’t reflected in the data. Instead, the USC report broke down rents by four levels to see who was paying what at different price points.
The inflation-adjusted study found 58 percent of San Diego metro renters were paying rents in the highest bracket in 2016, up from 37 percent in 2000. Nine percent of San Diegans were paying the rents in the lowest level in 2016, down from 23 percent in 2000.
Rafael Bautista, organizer with San Diego Tenants United, said efforts like AB 1482 don’t go far enough because of the stress renters have been under for years. He suggested annual rent increase caps should be 2 percent.
“Seven percent is still going to displace a lot of people,” he said.
Oregon in February passed a statewide bill similar to AB 1482 but with a higher threshold. The law would limit rent increases to 7 percent, plus, inflation each year. Although, both laws would cap increases at 10 percent.
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