Update, November 8, 2022: A new UC Berkeley Terner Center report says AB 1482 isn’t working for tenants — and may never work if reforms don’t take place. Despite how the real estate industry frames AB 1482, it’s obviously not one of the most effective anti-rent gouging laws in the country. Far from it. More details at the end of the article.
A so-called “anti-rent gouging” law championed by state politicians in 2019 has failed to protect California renters. Housing Is A Human Right predicted that the legislation, known as AB 1482, would be a seriously bad deal for tenants. Unfortunately, Housing Is A Human Right has been proven correct in 2022 as inflation increases.
In 2019, the California legislature proposed a supposed anti-rent gouging bill called AB 1482. It established a five percent annual rent cap plus inflation, and landlords were held to a maximum rent hike of 10 percent. Gov. Gavin Newsom signed the bill into law in October 2019.
But the Los Angeles Times pointed out this week that the “10 percent limit applies to only complexes built before 2007 and those not subjected to rent-control restrictions, meaning that landlords of buildings that fall outside those parameters can raise their rents even higher.”
The LA Times added, “And because inflation is so high across the board right now, every region in the state meets the requirement for the cap to be set at a 10 percent increase.”
Numerous news outlets are reporting that tenants and activists are now fearing the worst: that landlords who fall under AB 1482 will hit tenants with the maximum 10 percent rent hike, with middle- and working-class renters squeezed even more by California’s ongoing housing affordability crisis.
For example, if a renter is already paying $2,000 per month to a landlord, a 10 percent increase will add another $200 – or, put another way, another $2,400 in rent for the year. That’s an enormous amount that poor and middle- and working-class tenants simply cannot afford, which can lead to devastating, life-altering consequences.
A recent study by Zillow found that in cities where people spend more than 32 percent of their take-home pay on rent, a spike in homelessness will follow. A 10 percent rent increase, as allowed by California law, will undoubtedly push many middle- and working-class tenants into shelling out more than 32 percent of their paychecks to landlords, causing them to face the possibility of homelessness.
In 2019, Housing Is A Human Right noted that there were “serious problems with the bill.” We wrote: “The currently proposed rent cap is significantly higher than what tenants can afford in an era of stagnant wages and severe income inequality. It risks becoming the new floor – the new normal for rent increases statewide.”
Housing Is A Human Right instead urged “real rent control,” not AB 1482. “We must protect tenants facing the prospect of losing their homes because of skyrocketing rents – and preserve the pool of affordable, rent-stabilized housing in the long run.”
Housing Is A Human Right continues to advocate for strong rent control policies and the end of statewide restrictions on local rent control ordinances. It’s especially needed with the rise of corporate landlords, whose predatory business practices and unfair, excessive rent hikes have contributed mightily to the housing affordability and homelessness crises.
UPDATE: In September 2022, UC Berkeley’s Terner Center weighed in on the failures of AB 1482. In the past, the Terner Center has championed wrong-headed policies that helped fuel the housing affordability crisis, but we’re thankful to see them take a much-needed critical look at AB 1482.
In a new report, the Terner Center found a number of damning things:
- Perhaps most important, the think tank noted: “With no way of determining rates of compliance and no built-in enforcement mechanism, it is not clear how effective AB 1482’s rent protections are;”
- “60 percent of repeat rental listings posted in the spring of 2022 had an annual price increase above the corresponding rent cap” as laid out by AB 1482. In other words, landlords were charging more than the 10 percent limit;
- To make AB 1482 more effective, the Terner Center found a serious need for “more data and transparency about rental prices;”
- “Because AB 1482 is so broad in scope, educating and informing both landlords and tenants on how this law applies to them remains challenging;”
- “Further development of programs to ensure landlords understand their responsibilities and that tenants are able to enforce their rights is critical to AB 1482’s long-term success;”
- “The protections provided in AB 1482 are only effective if landlords comply with the law;”
- “Research on other types of tenant protection policies consistently shows that tenants, particularly from vulnerable populations, are at a disadvantage in ensuring their rights are enforced;”
- “Without the development of accountability mechanisms, it will be difficult to achieve AB 1482’s goals, even with robust education and outreach efforts.”
Like we said, AB 1482 isn’t working. And if the state legislature doesn’t make many reforms, it will never work. To ensure that tenants are protected, we need real rent control in California.