California Rent Cap Law – Is It Working?
Since passing in 2019, California’s rent cap law has limited rent increases statewide to 5% plus the regional inflation rate but the big question is this law actually working?
In this article we will provide more insight into California’s rent cap law and if it’s a bill that’s actually working or not.
About California’s Rent Cap Law
Are landlords obeying California’s rent cap law? It’s impossible to know for sure — but landlords have plenty of incentive not to.
Those are the key findings of a new report from the UC Berkeley Terner Center for Housing Innovation and the TechEquity Collaborative. It found that 60% of apartments in California have seen rents increase by a greater percentage, year over year, than is allowed by the state’s rent cap law.
That statistic, based on asking rents for vacant apartments, is a proxy for the broader state of the rental market. Data isn’t publicly available for rent increases imposed on existing tenants, and this data doesn’t mean 60% of tenants are seeing rent increases above the rent cap.
However, the study illustrates the powerful incentives landlords have to increase rents above the cap for existing tenants, or to try to force them out in favor of higher-paying tenants. And right now, there isn’t really any way to find out whether they’re doing so, since enforcement is entirely dependent on tenants — many of whom are likely unaware of the law — to report violations.
“When the market is appreciating rapidly, landlords, whether or not they’re allowed to or whether they know about the law, may try to mirror the price increases they see on the vacant tenancy market,” said Alex Casey, director of the Housing Affordability Data Lab at the Terner Center and a co-author of the report. “We can’t say that there’s this many units that are violating the threshold, and that just points to a real hole in the data reporting and transparency for this law.”
Several bills that would have provided that data and transparency failed in the Legislature in recent years. The Terner Center’s report suggests it’s time to revisit those proposals, especially a rental registry that tracks rents and other information about California’s apartment stock.
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