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California Legislation Capping Rent Hikes Clears Another Hurdle


The California Assembly's Appropriations Committee passed a measure that would cap annual apartment rent hikes at no more than 5% beyond the federal Consumer Price Index. Photo: iStock

A California legislative proposal placing caps on apartment rent hikes was passed by a key Assembly committee, moving closer to enactment one of several measures focused on combating a housing affordability crisis in the most populous U.S. state.


Assembly Bill 1482, proposed by Assemblyman David Chiu of San Francisco, a Democrat, now heads to the full Assembly for a vote upon approval by that body’s Appropriations Committee by a 12-4 vote. It would eventually also require approval from the California Senate and Gov. Gavin Newsom, a Democrat.


AB 1482 would cap annual rent increases to the federal Consumer Price Index, plus 5%, for all rental properties in California that are not subject to local rent control ordinances.

"Millions of Californians are just one rent increase away from becoming homeless," Chiu said in a statement following the Appropriations Committee vote. "This legislation will protect renters from the most egregious of rent increases while still allowing landlords to turn a profit."


Rent control, defeated last year in various California state and local election measures, is backed by affordable housing proponents but is opposed by many real estate and other business groups. Rent control has the potential to upend multifamily investment and development fundamentals in California and other states such as New York where it’s being considered.


But California officials and groups have not given up on passing some kind of legislation to tackle the state's growing housing crisis.


California has the nation’s largest homelessness problem with almost 130,000 people living without a home in the state, according to the 2018 Homeless Assessment Report from the U.S. Department of Housing and Urban Development. That accounts for 24% of the nation’s homeless population.


About 89,000 of those people go without shelter, making up about half of the country's unsheltered population.


California has several other legislative measures in various discussion and review stages aimed at curbing rents or changing development standards to encourage the building of more affordable housing, and Newsom has also put forth proposals reflecting those goals.


A division of advocacy group AIDS Healthcare Foundation, known as Housing is a Human Right, has also recently filed papers to get apartment rent control back on the California ballot.

© 2020 by Lee & Associates Investment Services Group

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