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California legislator passes cap on annual rent increases

By Jesse Gary, KTVU
Published  September 12, 2019 8:47pm PDT
News
KTVU FOX 2

SAN JOSE, Calif. (KTVU) - California's legislators have taken a major step towards making it easier for renters to afford annual increases. Working at a breakneck pace to beat the end of the legislative session, lawmakers Wednesday passed a cap on annual rent increases in California.

"Trump can go home with his little plan to put all the homeless in camps. Because hopefully our homelessness will go down," said Shaunn Cartwright, a South Bay housing advocate.

Advocates say the passage of the Tenant Protection Act of 2019 limits annual rent increases to 5%, and will prevent evictions due to exorbitant hikes. Cartwright points to multiple cases of the young and old forced to pack up and leave as the cost to live has continues skyrocketing.

Critics say while the five percent figure is fair, there could be long-term damage done that actually shrinks the supply of rental properties.

"Although it looks reasonable, it may end up discouraging people from investing in rental property or developing properties. If there's a shortage of housing, this is going to hurt housing production, potentially. And cause the problem to be even worse," said Johnny Khamis, a San Jose city councilman representing District 10. He also has a rental unit on the market in the South Bay.

Experts say the legislature's action won't help create more homes, or lower the purchase price for those looking to buy. It will ensure renters don't face extreme financial hardship in the form of a Draconian increase.

"We need to think in 10 year terms of how do we actually solve this problem? We have to figure out what are the rules that are preventing housing from being built?" said Dr. Robert Chapman Wood, a strategic management professor at San Jose State University.

The answer to that question may take a back seat as California Governor Gavin Newsom says he'll sign the rent cap bill into law. And in so doing, have California join a dozen other states taking action to protect renters from being pushed onto the street.