Newsom Signs Law Capping Rent Increases To 5 Percent For California

LOS ANGELES (CBSLA/AP) — California Gov. Gavin Newsom signed into a law Tuesday a bill which will cap rent increases across the state in an effort to tackle the homeless crisis.

Newsom signed Assembly Bill 1482, which will limit annual rent increases to 5 percent plus inflation. It bans landlords from evicting people for no reason, meaning they could not kick people out so they can raise the rent for a new tenant. And while the law doesn't take effect until Jan. 1, 2020, it would apply to rent increases on or after March 15, 2019, to prevent landlords from raising rents just before the caps go into place.

The law runs through 2030. It does not apply to housing built within the last 15 years. It also does not apply to single family homes, except those owned by corporations or real estate investment trusts. It does not cover duplexes where the owner lives in one of the units.

California and Oregon are now the only places that cap rent increases statewide. Oregon capped rents at 7 percent plus inflation earlier this year.

California's rent cap is noteworthy because of its scale. The state has 17 million renters, and more than half of them spend at least 30 percent of their income on rent, according to a legislative analysis of the proposal.

Several cities in the Southland already have similar rent cap laws in place.

The city of L.A.'s Rent Stabilization Ordinance allows landlords to increase rent by only 3 percent every year for rent-controlled units built before 1979.

In August, Culver City approved an ordinance which sets an annual 3 percent cap on rent hikes for apartment complexes built before Feb. 1, 1995.

In March, the Inglewood City Council passed an emergency ordinance which temporarily puts a cap on how much landlords can increase rent on their tenants in older buildings.

And last November, the L.A. County Board of Supervisors approved a temporary ordinance which limits rent hikes to 3 percent per year on certain apartments in unincorporated areas.

In conjunction with the rent cap, Newsom was also slated Wednesday to sign Senate Bill 330, which is designed to increase housing production by, among other things, streamlining the permitting process for builders by reducing red tape.