The California Assembly approved a bill that would cap rent increases statewide Wednesday, The Mercury News reports.
The bill passed 43-28 and will now head to the Senate. If approved and signed by Governor Gavin Newsom, California will become the second state to cap annual rent increases.
The bill would ban landlords from increasing annual rents by more than 7 percent plus the annual increase for the cost of living. A previous version of the bill sought to cap the hikes at 5 percent plus inflation.
Assemblyman David Chiu, the bill’s author, urged colleagues to support the bill to protect residents who are one rent increase away from homelessness.
“They are our neighbors,” he said. “They are our co-workers. They are our brothers and sisters. They are our grandparents.”
Along with raising the cap from his earlier bill, Chiu also agreed to exempt property owners with no more than 10 single-family homes and set the law to expire in 2023 to get the bill passed.
Oregon similarly passed a law capping rent increases at 7 percent plus inflation earlier this year.
Critics say rent cap is not enough:
“These bills did not help address California’s housing problems,” Alex Creel of the California Apartment Association told The Sacramento Bee. “(Realtors) negotiated amendments to benefit landlords and tenants and are pleased that, through working with the bill authors, legislators and other organizations, the bills will be amended to address our concerns.”
Assemblywoman Blanca Rubio said she was worried that the bill will cause landlords to raise their rents by the maximum amount each year.
“I’m really cautious about how we vote today because it’s going to price low-income folks out of housing because they know ... they won’t be able to afford the increase every year,” she told The Bee.
Rent control could make housing crisis worse:
“Rent control diminishes the supply and maintenance of rental housing, exacerbating the shortages that drive up rents. That’s why economists broadly reject the approach,” wrote the San Francisco Chronicle editorial board. “The challenge for legislators is to protect beleaguered tenants from the most abusive price increases without further discouraging supply — and to remain focused above all on increasing supply. While residents need help staying in the homes California has, the only way out of the crisis is to build many more of them.”