California Approves Statewide Rent Control

I am a landlord in Oregon, but not California. The curious, although ultimately predictable, outcome of the new rent control measure in Oregon is that while I have historically had an arrangement with my property management to be restrained in annual rent increases, they are now advising a default annual increase of the maximum allowed (7 percent before inflation). This is because larger adjustments cannot be made if and when necessary due to market conditions, so it&#x27;s smart to just steadily increase rent at the maximum rate permitted. If I agree, I believe the result will be more profitable for landlords, and hurtful to tenants.<p>The real solution to a housing problem is to incentivize and facilitate the building of more housing. ADUs, relaxed zoning, reduced building regulations, reduced fees for permitting, etc. I fear rent control is actually going to do more damage to the housing market than good.

I&#x27;m shocked at the ideological fervor here and the fact that virtually no one seems to have looked at the details of the actual bill. This is nothing like the rent control ordinance in SF that has caused $3000 units to get stuck at $500 rents. That will <i>never</i> happen under this law. The allowable increases are so much higher than &quot;normal&quot; rent control laws that any given unit will catch up to market rates in a matter of years, at most. Whereas the laws we love to hate result in units getting stuck far below market for decades or even generations.<p>The difference with this law is that a 20% rent hike will take 3-4 years to be implemented instead of 30 or 60 days. That difference, while not enough to allow all families to remain in place, will allow families time to adjust or move within a reasonable time frame.<p>This law is different. If you want to complain about rent control in SF or NYC or elsewhere, have at it, but know that most of your complaints do not apply to this law.

There is no functioning market to begin with. Housing prices and rent are through the roof in California, yet supply is not rising to meet demand, largely because existing owners oppose new construction.<p>Turnabout is fair play. If owners organize politically to control supply, tenants can organize politically to control prices.

One thing I have noticed as I have become more aware is that many of our laws are aimed at trying to freeze a moment of time, often by piling on contradictory policies on top of each other.<p>Subsidize home loans Ban new construction Ban rent increases<p>It is no wonder why housing prices&#x2F;rents continue to rise in these markets.<p>In software engineering sometimes conclude that a rewrite is necessary. How can we completely rewrite our regulations?

Rent control is about housing security for existing tenants. Even a perennial 7% increase can be better than discovering your rent will jump 300% next month.<p>But rent control in the absence of housing supply increases will undoubtedly exacerbate the problem, and at a steady 7% inflation would also slowly price out existing tenants.<p>Many parts of California already had rent control that was based on building age. Theoretically this could have been the best of both worlds--improved housing security for the majority of existing tenants, but an incentive for new construction, which would be excluded from rent control. Of course, the price of housing security would be marginally higher rent prices up front, but in the real world that&#x27;s a reasonable tradeoff. <i>Security</i> and <i>predictability</i> are at the top of most people&#x27;s hierarchy of needs, whether they admit that or not, and regardless of whether they&#x27;d willing pay for it. (Healthcare being a great of example of people predictably making irrational decisions, requiring government intervention to mitigate the consequences.)<p>Unfortunately, new construction in California is extremely costly for entirely unrelated reasons. I think most developers in California would have bargained statewide rent control for development as-of-right. That California permitted rent control again without doing anything substantive about lowering the costs of development is inexcusable. I&#x27;m sure lawmakers told themselves that they were buying the acquiescence of NIMBYs and local control advocates regarding future development as-of-right legislation, but they&#x27;re just lying to themselves.

I&#x27;m a renter in Oregon and I&#x27;ve been outspoken about this long before the laws were passed. From my experience, people who support heavy laws, regulations and taxes don&#x27;t spend enough time considering potential side effects. They feel like with enough support, they can just force anything they want to happen, while completely disregarding the market.<p>I feel like an amount of the general public just wants Big Daddy government to come in and authoritatively force everyone into an unnatural framework, which is pure ignorance.

Rent control is abused in SF. Every engineer I know, who has been living in SF for over 5 years is currently paying an absurd amount compared to their monthly income. I even sub-leased an apartment from a friend who took off a sabbatical, and he didn’t want to lose his rent control.<p>I don’t know who rent-control is supposed to benefit, but it seems broken. Eventually these places end up in the hands of people who know how to game the system. Just build more housing and the incentive will go away.

This rent control is a result of populism - plain and simple.<p>Rent control works for those already renting - and that is about it!<p>Everyone else suffers: those moving to the area, the landlords and those wanting to build more.

It seems more and more clear that California, or at least those in power in California, don&#x27;t <i>want</i> to fix the housing problem. Because if you&#x27;re a land owner, the only problem is people trying to spoil the good times. All this VC money pouring into the pockets of tech employees, and a larger and larger fraction going straight into landlords&#x27; pockets. What&#x27;s not to love?<p>If actually you want lower home prices, build more homes. Build tall (curb height restriction rules); build everywhere (no more minimum parking rules); build immediately (reduce complex planning permissions for developers). Just build more.<p>Supply and demand will decide the price of most goods, and housing is no exception. Rent control does not address the underlying issues that cause prices to rise- lack of supply and growing demand.

In NYC, rent stabilization laws have long had the concept of &quot;preferential rent.&quot;<p>Rent stabilized apartments have a limit to how much can be charged for them (called the &quot;legal regulated rent&quot;). That amount can only be adjusted (on a percentage basis city-wide) by a government board every year and by a handful of other exceptions (historically: improvements to the building&#x2F;apartment, major repairs, new tenant in the unit---however some of these exceptions were recently eliminated). The legal regulated rent is sometimes hilariously more than what any sane person would pay for a particular apartment and landlords would never be able to get a tenant at that price (for reference, as an NYC renter, my preferential rent is ~26% less than the regulated rent).<p>So in comes the concept of &quot;preferential rent&quot;: a price below what the landlord is legally entitled to charge. That preferential rent is in effect for the duration of the lease signed. With the recent rent stabilization reforms in New York state, renewal leases on rent stabilized units will only be able to charge the preferential rent plus that year&#x27;s percentage increase (as decided by the government board). Previously, landlords were allowed to raise the rent all the way up to the legal regulated rent plus that year&#x27;s percentage.<p>In other words, before the recent reforms, landlords had a strong incentive to keep the legal regulated rent as high as possible since they can always raise rents upon renewal to that value. Previously, preferential rents were truly temporary and the landlords had no obligation to maintain them upon renewal. Now the only way to raise the preferential rent to the regulated rent is if the current tenant vacates the apartment and the landlord finds a new tenant, on whom they may charge any value up to the regulated rent.<p>It&#x27;s difficult for landlords to kick out rent stabilized renters since those renters are generally entitled to renewal leases, but one simple tactic before was to just raise the rent from the preferential value to the regulated value. With the recent reforms, this is no longer a viable tactic.

When you mess with supply and demand there are always unintended consequences. I&#x27;m currently a beneficiary of rent control and am lucky to be paying below-market rate for my apartment. It would be nice to move to another neighborhood, but it would be dumb for me to give up the savings. My neighbor pays 1&#x2F;10th of what I pay for the same size apartment. Neither of us are leaving anytime soon. This is why there&#x27;s no liquidity in the SF housing market. They&#x27;re trapped and live in constant fear of being evicted.<p>On a philosophical level, why should my landlord be subsidizing our housing costs? If we want to make housing more affordable for low-income families, surely there&#x27;s a more equitable way to finance it.

The real solution here is to build more housing, as high prices are a market signal of a shortage. While I support more unit creation more than I support rent control, in the current crises we need both. What I still can&#x27;t get over is how much of CA land use politics is pure generational warfare, the olds vs the millennials, and it seems that the millennials are finally starting to win some fights.

This is a misleading headline.<p>The problem with rent control is that it allows many well-off individuals to collect ever-growing rent subsidies, to the point where after 10 or 15 years their rent is a joke compared to what their (often less-fortunate) neighbors are paying.<p>This bill does not have that flaw. Crucially, it sets the maximum allowable rent increase to be well <i>above,</i> not below, the historic long-term rent curve. Over time, in the long run, rents will approach market-rate. And that makes all the difference.

This is a disaster. Have we learned nothing at all? Rent control won&#x27;t help anyone except those who already have a low rent place and it&#x27;ll only help for the short term until they need to move. After 50 years of ridiculous regulations that prevent more housing from being added, we&#x27;re still moving in the wrong direction. This is truely a sad day.

Finally, a novel and innovate solution no one has thought of before.<p>What could go wrong?<p><a href="https:&#x2F;&#x2F;www.nytimes.com&#x2F;2000&#x2F;06&#x2F;07&#x2F;opinion&#x2F;reckonings-a-rent-affair.html" rel="nofollow">https:&#x2F;&#x2F;www.nytimes.com&#x2F;2000&#x2F;06&#x2F;07&#x2F;opinion&#x2F;reckonings-a-rent...</a>

There&#x27;s three paths:<p>1) Rent cap landlords. The landlords will cry Big Government.<p>2) Abolish single family-only zoning and legalize backyard cottages, townhomes and small apartments. The homeowners will cry Big Government.<p>3) Do nothing. Watch as more people start living in tents or endure super-commutes that snarl your traffic and worsen climate change.

&gt; The bill limits annual rent increases to 5 percent after inflation and offers new barriers to eviction<p>The limits to rent increases seem like they are enough to avoid significant short term spikes, while keeping up with market rate rents.<p>The biggest problem with some existing rent control (like in SF) is that the limit is so low that rents can&#x27;t keep up with market rates even over decades, which is clearly terrible economic policy. Maybe this limit is high enough that this won&#x27;t be as much of a problem for the rest of California.

Ah, because it worked so well in SF to ease housing prices! So why don&#x27;t we expand the program?<p>Will never cease to amaze me just now inept politicians are.

AirBnb really changes the dynamics of rent control. If you rent to someone in a hot market, you are entering a long term agreement with less flexibility in raising the rent in accordance with market rates. In the past, when faced with rent control, the landlord had to either accept it, or let the property sit vacant.<p>Now, with AirBnb, landlords have a much more viable option. They can put the property on AirBnb and have the flexibility to charge what the market will bear.<p>I foresee that as a consequence of this law, there are going to be fewer rentals and more AirBnb properties in California.

Oh joy, politicians trying to get votes from the economically unaware. If you thought there was a housing crisis, just wait. It&#x27;s going to be crazy.<p>Here is a different article, more tolerant of private browsing: <a href="https:&#x2F;&#x2F;www.forbes.com&#x2F;sites&#x2F;adammillsap&#x2F;2019&#x2F;09&#x2F;04&#x2F;more-rent-control-in-california-will-make-housing-problem-worse&#x2F;" rel="nofollow">https:&#x2F;&#x2F;www.forbes.com&#x2F;sites&#x2F;adammillsap&#x2F;2019&#x2F;09&#x2F;04&#x2F;more-ren...</a>

Prop 13 but for renters now too!<p>I wonder if this was pushed by landlords. It&#x27;s easier to push a 5% hike in rent every year than random 10-20% hikes. Especially in a nearly tapped out market. The prices are already astronomical and the home prices are fluctuating&#x2F;faltering. In 10 years, the rent will be 63% higher. And that&#x27;s after inflation. Your $3,000 1-bedroom will be nearly $4900 after 10 years. Unbelievable. Will FAANG prop up landlords by adding 5-10% TC increases every year? Startups certainly won&#x27;t. They stopped increasing comp a few years ago.

I wonder if they put in measures to make permitting easier for builders so we can actually get more housing built?<p>I guess we’ll find out in some years whether rent control entices builders to build more or if it will depress the market for building (as it usually does) such that at some point we see people (families) bunking together ala Soviet housing solutions to demand.

I’m sorry, I think it’s pretty odd when you can’t set the price for your property being leased.<p>If you like better rates, negotiate, fix zoning, or buy. If you can’t do any of those, you should leave. The rest of the country is really not that bad.

You hear that? That&#x27;s the sound of my home rising in value as supply to compete against it is reduced. Very cool CA!

It doesn&#x27;t help the housing crisis when the core problem is severe lack of inventory. It will help politically though since this helps seniors, the most reliable voting bloc. Pricing controls will just make it worse for everyone else, especially younger generations and families.

Meanwhile in the booming Seattle: <a href="https:&#x2F;&#x2F;www.seattletimes.com&#x2F;business&#x2F;real-estate&#x2F;amid-building-boom-1-in-10-seattle-apartments-are-empty-and-rents-are-dropping&#x2F;" rel="nofollow">https:&#x2F;&#x2F;www.seattletimes.com&#x2F;business&#x2F;real-estate&#x2F;amid-build...</a><p>&gt; “I’ve been renting in Seattle since 2014, and this is the first time where I felt like I have negotiating power,” said Kjerstin Wood, who went apartment hunting with her partner last weekend and got bombarded with offers like free parking that she plans to use to play landlords off one another. “For the most part, everyone we’ve met with has been very eager to get us to apply right then and there.”<p>&gt; The trend is likely to continue: The apartment-construction surge that began earlier this decade is continuing at the same brisk pace, outpacing demand for rentals even as the city’s population booms.<p>And a 2017(!) article talking about vacancy rate in Downtown LA that has seen a huge building boom (no not nearly enough to really depress prices, but enough to stave off the meteoric rise): <a href="https:&#x2F;&#x2F;www.scpr.org&#x2F;news&#x2F;2017&#x2F;09&#x2F;15&#x2F;75615&#x2F;in-high-vacancy-dtla-landlords-offer-move-in-speci&#x2F;" rel="nofollow">https:&#x2F;&#x2F;www.scpr.org&#x2F;news&#x2F;2017&#x2F;09&#x2F;15&#x2F;75615&#x2F;in-high-vacancy-d...</a>

The Bay Area desperately needs ~6-story units in every urban area and near every public transit stop.

Just curious how the success of such a measure might be evaluated? Or is this pure theatre?

Regarding SF house prices in particular:<p>San Francisco prices go up =&gt; only tech bros can afford rent<p>San Francisco rent prices get capped =&gt; tech bros still need place to live and win rental application lotto<p>Artists can&#x27;t afford rent, but want to live in city full of tech bros and glass condos?<p>It doesn&#x27;t make a lot of sense to me why you&#x27;d want to stay in SF if you&#x27;re genuinely an artist. Is it a romanticization of the city&#x27;s past rather than the reality of the present - a stark line between rich and poor with tent cities all around? An elementary school system not friendly to families making community ties (random geographic assignment)?<p>SF doesn&#x27;t have a thriving liberal arts school - the art academy is a profit pit meant to create student debt. Aren&#x27;t places like Berkeley, Pacifica, and Santa Cruz much more attractive locations? Even farther south like San Luis Obispo?<p>Lastly I am just going to ask this more fundamental question: should anyone be allowed to live anywhere they want, and is that the right people are striving for? Or is it simply they should be able to stay in the place they are once they&#x27;re able to `get int`?

Vote pro housing centrist fiscally right republicans , we need a more diverse ca congress

&gt; <i>For a quarter-century, California law has sharply curbed the ability of localities to impose rent control. Now, the state itself has taken that step.</i><p>Yep. Because communities shouldn’t be able to decide for themselves. Make it a state law. I’m just glad that (for now) these central planners are limited to a state economy and are not in Washington.<p>Great news for property owners in CA. Studies show over and over rent control legislation further restricts supply[1], so the existing housing will become even <i>more</i> valuable!<p>1. <a href="https:&#x2F;&#x2F;web.stanford.edu&#x2F;~diamondr&#x2F;DMQ.pdf" rel="nofollow">https:&#x2F;&#x2F;web.stanford.edu&#x2F;~diamondr&#x2F;DMQ.pdf</a>

Before anyone gets too excited, the cap is apparently 5% plus inflation per year [1] which seems pretty mild? (For comparison, Oregon&#x27;s rent control is at 7% plus inflation, and San Francisco varies but is below 3% [2].)<p>[1] <a href="https:&#x2F;&#x2F;la.curbed.com&#x2F;2019&#x2F;9&#x2F;10&#x2F;20857225&#x2F;california-rent-control-bill-1482-approved" rel="nofollow">https:&#x2F;&#x2F;la.curbed.com&#x2F;2019&#x2F;9&#x2F;10&#x2F;20857225&#x2F;california-rent-con...</a> [2] <a href="https:&#x2F;&#x2F;sfrb.org&#x2F;topic-no-051-years-annual-allowable-increase" rel="nofollow">https:&#x2F;&#x2F;sfrb.org&#x2F;topic-no-051-years-annual-allowable-increas...</a>

&gt; California lawmakers approved a statewide rent cap on Wednesday covering millions of tenants, the biggest step yet in a surge of initiatives to address an affordable-housing crunch nationwide.<p>As though California is at all symptomatic of the problem of providing affordable housing in the rest of the nation. They might as well say it&#x27;s the biggest step taken in an affordable-housing crunch globally.<p>A whole article about California&#x27;s housing problem without a single mention of Prop 13, though? That&#x27;s some impressive willful ignorance.

One thing that tends to be excluded in most analysis of rent control is the preference of landlords to operate fewer, more expensive units. When you have more units, you have more to keep track of - more tenants, more staff, more maintenance. A high-end luxury unit and a dirty fleabag mostly differ in some move-in amenities and services; rich tenants might demand more, but they don&#x27;t trash the place <i>faster</i>. So every unit tends to be luxury by default since that&#x27;s where the upside is.<p>If your rent increase gets capped by rent control, your ability to stay at a limited scale of operation and just add to the price gets squeezed, and that motivates making more capital investments in property(and specifically in vertical upgrades, since horizontal expansion puts them in a land bidding war). It hits investment properties run by large companies the most, and challenges them to use land more effectively to stay competitive, in the same way that higher minimum wage challenges companies to use labor more effectively.<p>However, we still need an SB50 or successor bill to deal with the build restrictions. The landlords and developers can demand building big(and they do already in many cases) but they&#x27;re held back by zoning laws put in place by NIMBY residents. The trick is that instituting rent control does something change the outlook of the NIMBYs too, since their property value has a relationship to the value of rentals. Rental rates and turnover slow down = property values slow down = their house becomes less of an investment.<p>So it&#x27;s a good first step either way.

This is interesting as Berlin, Germany is also set to pass a five-year rent freeze to address tenant concerns and rising gentrification. I always attributed to the fact that Berlin for some years has had a pretty left-leaning state&#x2F;city government and the fact that Europeans are more willing to try things like this. As an American living here, I never thought I&#x27;d see such a large scale action back in the States. Is it now &#x27;global&#x27; zeitgeist at this point to make moves like this?

For those living in SF, this significantly expands the number of eligible apartments for rent control. Right now only multi-unit homes&#x2F;apartment complexes built before June 1979 have rent control. Now everything (except single family homes&#x2F;owner occupied duplexes) built within last 15 years on rolling basis is eligible.<p>Given how slowly SF builds housing, the fact that anything built 2004 and earlier is eligible basically means almost everything except new high rises.

This is only going to make the housing problem worse. They need to remove all the onerous zoning laws and restrictions of building taller buildings. It’s a supply problem.

Rent control causes housing shortages.<p>It limits the price of housing to an arbitrary price which is below the demand price of housing.<p>It fails to communicate the housing shortage with higher prices, and therefore it does not incentivize the building of additional housing to relieve the shortage.<p>Nor does it incentivize the finding of lower-cost alternatives, because all prices are capped at the limit, and so there is no information communicated about their relative differences.

We absolutely need more ways to buy a house without all the rigamarole that causes a buyer to sell at 20% more a year later. Banks and real estate agents already force most people into selling at much higher. What if there was a special kind of property that&#x27;s good at in-and-out ownership, low friction moves like rentals. Get rid of the bank and agent fees. Build it into the lien.<p>Startup idea anyone. The demand would be high.

And of course there are exemptions for mom &amp; pop landlords in the law.<p>This is why I&#x27;d rather do business with big megacorps than with small businesses; mom &amp; pops are straight-up allowed to hurt their customers and their employees in ways megacorps aren&#x27;t legally allowed to. See also: exemptions mom &amp; pops have from mandatory sick leave laws, anti-discrimination laws, mandatory health insurance, etc.

Ok, now there should be very little reason or objection from tenants rights folks not to pass SB-50 next session to make it easier to build density near transit. <a href="https:&#x2F;&#x2F;leginfo.legislature.ca.gov&#x2F;faces&#x2F;billTextClient.xhtml?bill_id=201920200SB50" rel="nofollow">https:&#x2F;&#x2F;leginfo.legislature.ca.gov&#x2F;faces&#x2F;billTextClient.xhtm...</a>

&gt; “The housing crisis is reaching every corner of America, where you’re seeing high home prices, high rents, evictions and homelessness that we’re all struggling to grapple with,” said Assemblyman David Chiu, a San Francisco Democrat who was the bill’s author.<p>If your new law is such a good idea, why do you have to lie so blatantly to promote it?

In Paris, FR, rent control was approved a few years ago. The problem is that there is no incentives for landlords to update their apartments and to maintain them clean and good looking.<p>Before, a pretty apartment was typically more expensive than a similar apartment (same size, same zone) which was ugly and Now, it’s same price.

Aren’t the effects of rent control well-studied and well-understood phenomena at this point? Won’t this cause the rental market to become effectively deadlocked? i.e. people staying put for very long amounts of time due to not wanting to lose their low rents, landlords refusing to maintain their properties due to lack of incentives, inefficient allocation of rental properties (one person living in a 2 bedroom merely because the rent is low), and so on?<p>This seems like a bad solution to a problem (housing shortage @ current market prices) with an obvious solution (allow more housing to be built).<p>It’s almost like the politicians pushing for this policy don’t value the input of experts and the application of research, but instead are only interested in solutions that sound good at the most superficial level. Golly!

Can someone explain how rent control works? It seems like it only benefits long-lived tenants. In the Bay Area, every apartment I’ve signed with advertises a “1 month off” deal or some equivalent. That guarantees them the option of at least a 9% increase in rent the second year.

I genuinely don&#x27;t understand folks reaction to Rent Control bills like this or the one recently passed in New York.<p>Don&#x27;t you think that policymakers KNOW that the best way out of a housing crisis is to build your way out? California has put out bills in recent years to try to remedy this (ie. the bill that would require housing near transit lines) that FAILED, breaking down all the local neighborhood associations and powerful interests is not something that can be done in a single legislative cycle.<p>Rent control is about making it easier for everyday folks to survive day to day, its not meant to be a permanent solution, and if in 20 years this bill is still needed it won&#x27;t be for lack of effort, it will because the NIMBYs were able to win out.

I live in Sweden, which is heavily rent controlled. Let me just say that this hasn&#x27;t worked out. Rental apartment contracts in larger cities gets sold on the black market for larger sums.<p>Queues are over 10 years in many cities and there is no real way of getting a rental apartment in any larger city. This means people are pushed into buying a housing apartment which cost a lot of money and drives up prices a lot.<p>It&#x27;s not viable or logical that an apartment in central Stockholm should cost as much as an apartment in a small village in northen Sweden.<p>Norway, Finland and Denmark all have more free market and it&#x27;s much easier to find a rental in all those countries. I would advice against having rent control.

Instead of controls like this, increase housing supply and let the market drive down rent and house prices. If they do that, maybe the renters won&#x27;t have to rent anymore.<p>The landlord&#x27;s would be much more afraid of this kind of market based solution.

The only way to drive down rents AS A WHOLE is to increase the supply of housing.<p>Any legislation that makes renting less profitable will make BUILDING RENTAL PROPERTY less profitable.<p>This sort of thing, on the whole, makes rents increase by decreasing housing supply.

What hope do we have for self governance when the poster child of bad economic regulations, universally derided for having the opposite effect for which it intends, can still be implemented? Are governments incapable of learning? Are we doomed never to make any political progress on policies that are counter-intuitive, even when there is overwhelming agreement and empirical evidence of its harm? This makes me cynical of climate change. Even if we do achieve a carbon-neutral lifestyle, who&#x27;s to say the next generation of politicians won&#x27;t make the same arguments being made today against stopping climate change?

Has anyone done an analysis to see what fraction of the wealth generated by silicon valley ends up in the hands of people who happened to own land there? If normal houses cost millions of dollars, I could see it being a sizable fraction.<p>I think the pricing mechanism plays a useful role in encouraging people with valuable land to give it to others who will use it more productively. At the same time, I think there&#x27;s a risk that people who just own land could capture an unreasonable fraction of the generated wealth.<p>Would it really be right for San Francisco homeowners to capture over 50% of the wealth from Silicon Valley&#x27;s success?

Well, more bad and broken policy coming out of the state that has a long history of borking its housing policy.<p>This does nothing to fix the problem. They need to build more housing. A lot more housing.<p>But, no, we can&#x27;t do that. That makes too much sense or something.<p>For people looking for solutions, here is a link to a supposedly suppressed Housing Development Toolkit put out by the White House in 2016:<p><a href="https:&#x2F;&#x2F;www.whitehouse.gov&#x2F;sites&#x2F;whitehouse.gov&#x2F;files&#x2F;images&#x2F;Housing_Development_Toolkit%20f.2.pdf" rel="nofollow">https:&#x2F;&#x2F;www.whitehouse.gov&#x2F;sites&#x2F;whitehouse.gov&#x2F;files&#x2F;images...</a>

I have owned income property in San Diego for over thirty years, so I have a direct interest in this.<p>After looking at the details, this law looks OK for the present but if we enter a period of hyper inflation then it is not so good. The 5% plus inflation might not be enough since the government jumps through hoops to underestimate the rate of inflation. If we have 75% inflation and the government admits to only 20% inflation (for a hypothetical argument), then landlords will be damaged financially. I believe that sometime the government will inflate its way out of debt.

It&#x27;s 5% rent increase, not the 1-2% seen in SF and NYC. Properties don&#x27;t typically increase in rent that much. This isn&#x27;t likely to lead to the absurd $1000 studio apartments in Manhattan.

<i>California hurt itself in confusion</i>

Rent control benefits no one, nor the landlord and certainly not the tenant. However, it is a classic &quot;virtue signaling&quot; used by politicians to advance their career. This is no exception.

Now that I think of it, I wonder why the larger employers in the South Bay don&#x27;t build dormitories. Given a strong tendency to hire people fresh out of school (or nearly so), I would think that a great big dormitory on the company campus might be just the thing. It removes housing as an issue for a new hire, ties them more closely to the company (quit, you have to find an apartment), and they can spend their evenings shooting Nerf darts and shopping at the GoogleGrocery and the GoogleCoffeeShop.

I think Henry George&#x27;s Land Value Tax is a great solution that can really help us avoid a situation similar to what occurred during Mao Tse Tsungs revolution.

People will cry foul this will drive costs up in the long term. But we are far removed from free market economics since cities have put restrictions in building new housing thus keeping real estate prices artficially high. Now the state puts rent cost restrictions that will drive the prices of real estate down. Rent control seems to be used as a means to an end rather than a goal on itself because politics.

I&#x27;ve just read through this law, and I think there might be some problems with it.<p>My uncle has just been evicted so that the owner can fix the place up and raise the rent. Under this law, that would be illegal, but this protection only comes into effect starting January first.<p>I expect to see thousands of similar last-minute evictions as anyone contemplating this course of action tries to get their tenant out before the end of the year.

Rent controls are either toothless or only help standing tenants.<p>Indeed, they work against supply while increasing demand. This does not help people looking for a home.

&gt; Economists from both the left and the right have a well-established aversion to rent control, arguing that such policies ignore the message of rising prices, which is to build more housing.<p>Nonetheless while it doesn&#x27;t fix the underlying economics, I can see how it could be good to have a damper on the volatility of real estate prices, so that prices swing over the course of many years rather than violently.

The only solution to higher rent is to build more, a LOT more, housing.<p>The rest of this is just distortion on the economy that will lead to all sorts of bad outcomes

We&#x27;re already at unsustainable YoY rent increase levels in many places IMO. I for one have no problems moving if my LL decides to increase my rent ANY percentage. I know that over the course of my next lease I will always be able to come out ahead by hundreds if not thousands of dollars for the same price I&#x27;m currently paying and for sometimes better place.

Hello, 11 month leases!<p>“Notwithstanding any other law, an after a tenant has continuously and lawfully occupied a residential real property for 12 months, the owner of the residential real property, in which the tenant has occupied the residential real property for 12 months or more, with or without a written lease, property shall not terminate the lease tenancy without just cause”

Governments respond to complaints from the masses.<p>From what I&#x27;ve heard, rent in a lot of Californian cities is extremely expensive, so I assume people are complaining about the price of their rent... probably statewide to some extent.<p>Hence the new bill. It&#x27;s just a reaction to a temporary problem.<p>Which will probably stay in place long past the problem is solved!

It&#x27;s still allowed to grow much faster than taxes under prop 13, which is rent-control to benefit property owners.

So yet another thing -- along with Prop. 13 and the cost of housing, which is partly the result of Prop. 13 -- that helps people who are already here, at the expense of newcomers. I suppose you could argue that that&#x27;s appropriate, but it seems short-sighted to me. I&#x27;d rather see us build a lot more housing.

This will encourage landlords to tear down existing properties rather than renovate them, as well as to not maintain them well.<p>Rental housing quality will bifurcate further, with poor and lower middle class people living in worse housing.<p>This is bad policy. It&#x27;s not replicating the absolutely insane policies of SF, but it&#x27;s still bad.

In Oregon rent control was applied in a very targeted way to encourage new building such as exemption for the first fifteen years after a building is constructed and rezoning of a massive number of lots to allow multi tenet housing.<p>Did the California laws include anything to encourage additional housing to be built?

This is nuts. In Iowa this might be unconstitutional as the government is prevented from rewriting contracts.

<a href="http:&#x2F;&#x2F;archive.is&#x2F;5jIXP" rel="nofollow">http:&#x2F;&#x2F;archive.is&#x2F;5jIXP</a>

Do statewide rules even make sense, in such a large state as California? The housing markets in the rural east and north surely are not identical to the housing market in the Bay area, San Diego, and LA. Even Sacramento&#x27;s rentals are an average $1000 cheaper than the SF area.

Most new (first time tenants) will get a cliff rent with next few years of upside factored in. But this will benefit existing tenants. I still think right law to change would be to allow high rises and right government intervention would be to create large scale new units

Text of the bill here: <a href="https:&#x2F;&#x2F;leginfo.legislature.ca.gov&#x2F;faces&#x2F;billTextClient.xhtml?bill_id=201920200AB1482" rel="nofollow">https:&#x2F;&#x2F;leginfo.legislature.ca.gov&#x2F;faces&#x2F;billTextClient.xhtm...</a>

This allows for time to adjust (move) which is good. It doesn’t allow the person serving the espresso to the lawyer to live next door to the lawyer. That may or may not be an ideological goal, but this doesn’t address that.

Between this and prop 13 it might be easier to just build a wall around the state.

When rents are high we should incentivize development of more housing stock. Increase supply until the market finds balance with the demand. Rent control has the opposite effect. It’s a disincentive to new development.

I wonder how much someone would charge for insurance to cover the difference between 5%+inflation and market rate?<p>It&#x27;s effectively a option on future rent prices... it shouldn&#x27;t be particularly hard to value numerically.

What is the historical rate of yearly rent price increase in the bay area?

&gt; The housing crisis is reaching every corner of America, where you’re seeing high home prices, high rents, evictions and homelessness that we’re all struggling to grapple with,” said Assemblyman David Chiu<p>Chiu is being misleading, to put it mildly.<p>The median home value in Texas is under $200,000; in Dallas it&#x27;s only $213,000. In Florida it&#x27;s $235,000; in Tampa it&#x27;s $219,000. In Illinois it&#x27;s $182,000; in Chicago it&#x27;s $226,000. In Pennsylvania it&#x27;s $174,000; in Pittsburgh it&#x27;s $146,000. In Ohio it&#x27;s $140,000; in Cincinnati it&#x27;s $144,000. And so on. So much for every corner of America.<p>In California it&#x27;s $548,000; in San Francisco it&#x27;s $1.3 million. California&#x27;s housing problems are in fact not a national problem.

So every landlord will now raise 5% annually even if they hadn’t in the last. That’s often the effect of governments regulating increases, from what I have seen of stage utility regulation.

I recently bought a house in CA. Knowing this legislation was pending I didn’t get roommates. I’d rather AirBnB than be forced into rent control. That’s now two rooms off the market.

Things like this can make sense in the short term, but there needs to be sunset provisions to force a long term solution. I&#x27;m not really sure what that would look like though.

This move is already proving pretty awesome for homebuyers like me as more builders seem to be focusing on &quot;build and sell&quot; not instead of &quot;build and rent out&quot;.

I thought california was trying to reduce its homeless population?

They could just build&#x2F;provide new housing for everyone and everything would be at normal rates... But if you don&#x27;t allow, then the prices go up...

This is <i>not</i> &quot;approve by California&quot; yet.<p>It passed in the assembly, but must also pass in the senate and be signed by the governor before it actually is law!

Just great news. Landlords would also raise rents to kick people out they didn&#x27;t like. Then reduce the rent back with the new tenants.

So if a new apartment comes on the market in SF (never gonna happen, I know) what rental rates can they start with? Whatever they want?

This is a really difficult-to-solve problem. I never found a city with good prices for housing (compared to the local average salary).

Won&#x27;t this slow down gentrification of a neighborhood? There&#x27;s neighborhoods in most cities that 10 years ago were &#x27;the bad neighborhood&#x27; that have become walkable and popular again.<p>It&#x27;s hardly unfeasible for the bid area to have a rent of &lt;$500, but after gentrification could easily pull $1500. At a 5% cap a year, it would take considerably longer to reach this price, which will likely slowly down the conversion of these areas, as the demographics would change much more slowly.

How does this work? Can&#x27;t the landlord just refuse to renew the lease, and then lease it out to someone else with a higher rent?

Rent control benefits renters in the short term who don’t want or don’t need to move. However, property owners can’t price rents according to market conditions. This suddenly lowers the value of rental property and will mean that there is less incentive to build new rental property or maintain or improve existing rental property.<p>Where else is it being done? Is it a success in these places? There must be some places it is viewed as working or why else would California do this.

Can anyone point to a place (city, state, country) where homelessness and housing supply were positively impacted by rent control?

Any rent control is a distortion that should not be done. Open up property rights and get more high-density housing built. Done.

I&#x27;d be down if rich yuppies like me got not rent control, but a retiree got all the protections. Where do we draw the line?

I agree that at this point rent control is a good option. Housing prices are going up so fast that rents need to go up too. The higher rents then give an incentive for house prices to go up. It becomes a cycle for both to increase. But rent control by itself is not enough. The other leg of the solution is to increase housing via governmental incentives. Otherwise, rent control will make the situation worse since there is no incentive to increase housing.

Another unintended consequence is likely to be a degradation in the average quality of the housing stock. Everything gets old and needs to be replaced &#x2F; upgraded. With limited ability to pass on the cost of improvements, and less mobility for tenants, the best strategy for owners is to extract value from the property by neglecting repairs. The annual rent increase can be pegged at maximum, while the building itself moves &quot;down market&quot;.

Well, looks like I will be forced to increase the rent next year to a maximum so I can decrease long term risk.

In the past 5 years in Bay Area. My rent has been increasing by 9-10% every year, so I welcome this law.

As a Marylander, I’m okay with this. Let California destroy itself. Better for the rest of us.

The problem is we need new housing units and the local governments usually make the construction process so difficult that it&#x27;s becoming increasingly unprofitable unless you are a very large corporation. This makes it even more difficult, especially in the multifamily space.

California is certainly coming out with a bevy of terrible legislation recently. This particular one should be entitled &quot;The Disincentive to Produce and Maintain a Healthy Stock of Rental Housing Act&quot;.

Well there goes the state. These people have no clue how to manage a state. This will ruin what&#x27;s left of the housing market and make the state completely unlivable.

What has changed in the new state laws?

It is fun watching the Democrats running California to self pwn themselves over and over with idiotic legislation like this.

It’s about time. Landlords have been exploiting tenants in California (and across the US) for far too long.

The only positive about this (counter intuitively) is that it will show that rent control does not work

Supply and demand

Really cool

The real solution is to decommodify housing.<p>&gt;The landlords, like all other men, love to reap where they never sowed, and demand a rent even for the natural produce of the earth.<p>-Adam Smith

What we really need to do is make owning a house more affordable. People buying up rental properties is a bane on the housing market and human existence in general.

Wow. State takeover of everything. Downright scary

I’m surprised to read negative opinions about rent control. The alternative to rent control is having one’s rent double next week. I’m amazed that rent control was not a thing!

HN: According to the simple laws of supply and demand, housing prices would go down if we just increased supply to meet demand.<p>Also HN: These rent controls are just going to make the housing problem in this state even worse.<p>I don&#x27;t get it. If the situation were really as simple as the first statement implies, then if this particular law was really going to have a catastrophic effect on housing, that would just mean people would leave and demand would go down and prices would fall, right?<p>Is it possible that California&#x27;s housing problems are maybe a little more complex than a few out-of-context pull-quotes from Wealth of Nations would suggest?

Perhaps an alternative real solution to the housing crises is the abolishment of professional landlords themselves. Why should we support a system where people can own many properties, each feeding them 1&#x2F;2 of someone else&#x27;s paycheck? Public-owned housing is the future. It works in Europe and it can work here.<p>Treating housing as an investment vehicle is fundamentally incompatible with the ideal of housing being affordable. How can you possibly have affordable housing in a system where housing increases in value (cost) at 5% a year? Who could possibly afford it after several decades of compound growth?