Lawmakers sent Governor Gavin Newsom a bill mid-last week which, if signed, would put a limit on rent increases statewide. California is one of the nations most populous states. It also has one of the biggest state poverty rates at 18.2% (Source: https://www.census.gov/content/dam/Census/library/publications/2019/demo/p60-268.pdf). This bill would limit annual rent increases to 5% plus inflation. It would expire in 2030 and would not apply to homes built within the last 15 years (to continue to encourage new development) and single family homes not owned by corporations or trusts. Also exempt are duplexes where the owner lives in one unit (Source: The Union Newspaper 9/12/19).
Not only would rent caps be implemented, but new hurdles for evictions to take place would also be another protection to housing and the tenants involved. “Gov. Gavin Newsom, a Democrat who has made tenant protection a priority in his first year in office, led negotiations to strengthen the legislation. He has said he would sign the bill, approved as part of a flurry of activity in the final week of the legislative session,” according to The NY Times latest article: California Approves Statewide Rent Control to Ease Housing Crisis.
Currently, only four states including Maryland, New Jersey, New York and now California had some form of rent control in place in certain parts of the states. Now, if passed, California will join Oregon to be the only two states with Statewide rent control.
As a Realtor and somebody that believes in homeownership and homeowner rights, I disagree with these blanket “fixes”. The local and state Association of Realtors opposed this piece of legislation. Although it will not effect the majority of individual investment property owners, an impact that is felt statewide. The solution to high housing costs is not to put greater restrictions on homeowners, in my opinion.
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