New rent limits take effect in California

The new statewide cap came into effect on August 1, and will last until July 31, 2027.

“Rent control in general is an extremely bad idea,” Steven Greenhut, director of the Pacific Research Institute’s Free Cities Center, told The Center Square in an interview. “It's a form of price control, and price controls always suppress supply.”

The maximum rent increase in the San Francisco area is 8.8%. In the Los Angeles area, the maximum rent increase is 8.7%. The maximum in the Riverside area is 8.1%, according to the attorney general’s office.

The maximum increase in the San Diego area is 8.2%. Down from 8.8% the year before, the San Diego area is the only area that is seeing a lower rate than the year prior.

Greenhut attributed the decrease in rent in San Diego to a “building boom.”

“The answer is to build more housing and to make it easier to build housing,” Greenhut said. “San Diego has seen a building boom, and that's how you reduce rents, through competition and increasing the supply.”

All other counties are limited to an 8.6% increase.

Housing built within the last 15 years, duplexes where the owner occupies one of the units, and single-family homes and condos, if they are not owned by corporations and tenants are served with a written exemption notice, are exempt from the rent increase laws.

Some counties and cities have their own additional rent stabilization laws beyond the statewide caps, which further limit the increase landlords can charge renters.

In the City of Los Angeles, landlords can only increase rent by up to 100% of the change in the Consumer Price Index. The maximum increase is 8% and if the change is less than 3%, the rent may be increased up to 3%, which was the limit this past year.

In Santa Monica, the local ordinance which took effect in 1979, limits rent increases to 75% of the change in CPI, with a maximum increase of 3%. The new rate takes effect on September 1 every year, according to Rose Patel, Santa Monica rent control public information manager. This year the maximum increase was 2.6%.

“Rent control does provide a level of stability for tenants, especially those on fixed incomes, and they know from year to year what their rent increase might be because it is capped at 3%,” Patel told The Center Square in an interview. 

Local Santa Monica rent control laws primarily apply to buildings built prior to 1979.

According to Greenhut, rent control laws, in places like Santa Monica where renters can keep apartments for prices below market value, incentivize renters to rent properties long-term.

“In Santa Monica, you've got lots of people who have been rent controlled for years, and they actually live elsewhere, but they keep these low price apartments near the beach, and so it transfers the property rights from the owner to the tenant,” Greenhut said.

Under the TPA, landlords are also prohibited from terminating a tenancy without just cause. Under Senate Bill 567, owners who decide to displace tenants to either occupy the residence themselves, or remodel, are required to waive the tenant’s last month of rent or pay the tenant one month’s rent as relocation assistance

The Center Square reached out to property manager associations and tenant advocacy groups, but did not hear back by the time of publication.