Here at The Home Company, we bring the best real estate experience possible, whether you are buying, selling, or simply just interested. It is our duty to discuss up to date topics with the idea that this information can be useful to anyone. Lately, we have received a large request for the topic of rent control and we want to acknowledge it.
To simply begin, what is “Rent Control”?
Rent control or rent stabilization is a term used for landlords and tenants to describe a federal, state, or local government law which controls rental prices.
In the state of California, rent control exists in a few major cities such as San Francisco, Los Angeles, and 13 others, but there’s a catch, the Costa-Hawkins Act. The law prohibits any local government to install rent control in mass on homes older than 1995. This means that homes from before that date are the only ones affected by the control.
In the past decade, the California housing market has immensely grown due to a high influx of new residents which in turn has created high demand for housing. Because the law allows landlords to decide on rental price changes, the market has progressed and increased extremely fast, making it difficult for low-income and even middle-class residents to afford living in these areas.
So what happens now…
Well, Californians have reacted and have voiced their opinion about the law that is creating current turmoil. In November 2018, a bill called the California Local Rent Initiative, will try to change the overwhelming status of the housing market by allowing local governments to implement rent control within their own communities to reduce continuous growth in rent demand as well as homelessness according to the main supporter of the bill, the Coalition for Affordable Housing.
In the meantime, cities like Alameda have ways to make it harder for landlords to increase their rent by over 5% each year, after their tenant’s lease is over, by having to file a demand to the housing authority of the city and then attending a hearing by the rent review advisory committee (see here).
On the other hand, there is a fight against the bill with the argument that rent control will create a large-scale halt to new and already commenced housing construction throughout the entire state, which would impact landlords, real estate investors and developers from profiting. With the high demand of residency comes a high supply in housing, and if rent control is adopted, then those investments could be lost.
All in all, both side have strong arguments, and the pro-rent control crowd is actively growing and making a sturdy stand leading up to the end of the year when the decision to pass the bill or not.
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