Proposition 10, the latest attempt at statewide rent control in California was defeated during the November 2018 election.
Sadly, the defeat of Prop 10 didn’t last for long since our elected officials immediately started 2019 with new measures to accomplish their goal of statewide rent control including AB 1482.
What Is AB 1482?
If it’s signed into law by Governor Gavin Newsom, AB 1482 will make it illegal for landlords and property owners in the State of California to raise rents here more than 7 percent plus the Consumer Price Index in one year.
The bill has been controversial from the start because opponents feel that it will stop investors and builders from wanting to build more housing in California while supporters of the bill feel that it gives landlords room enough to operate at a reasonable profit.
Will rent control help California? If history is any indicator of the results that come from rent control then the answer would be no.
California has a major housing shortage and ranks 49th out of all 50 States when it comes to per capita housing construction (2016 McKinsey Global Institute Report) so if AB 1482 is signed by the Governor this will only create another obstacle that will make it less desirable for builders to creating new housing in California.
Why Is Rent Control Bad for California?
There’s no denying that rents are high in California but having statewide rent control will only make maters worse because it’s going to be responsible for making the “Golden State” less desirable for real estate investors to build new housing here.
In 1999, just days before the world was going to end with Y2K, Forbes magazine published an article called “The Dumbest Ideas of the Century,” which included a list of the 10 worst economic ideas of the 20th century. Rent control was second on the list. “Here we have a policy initiative that has done huge damage to cities around the globe. It is very hard today to find an economist supporting rent control,” the article stated. Damage to cities, indeed, but damage to low- and middle-income renters most of all.
Source – Multifamily Executive
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