Extra Rent Control Hurts the Community.
Every community has a responsibility to honor and serve their residents and work to solve their own unique housing challenges. We support each community to find what works for them.
In 2019, Gov Newsom and California passed Statewide Rent Control. Other communities are now considering two additions to their ‘Rent Control’ ordinances – ‘Just Cause’ and ‘Rent Stabilization’. These sections are what people are talking about. They add a lot of regulations as to how landlords and tenants interact. They give housing providers added regulations dealing with bad tenants and evictions. They were proposed by the Democratic Socialists of America (Marin Chapter) and are similar to rent control in Berkeley and SF.
In summary, the major issues that most people have are that:
1. You may not get to vote on major policies that affect you – your income, your retirement and your property value. Because the ordinances are so major, we think that it is fundamentally undemocratic if the residents do not have the opportunity to vote.
2. For ‘Rent Stabilization’, Cal statewide law is max increase of 5% + CPI or 10% which ever is lower. This allows for an adequate return on investment, and allows for future investment in upkeep and improvements. Generally, good housing providers know the value of a good tenant, and often don’t raise the rent to a degree that would adversely affect the tenant. When a tenant leaves, it cost the housing provider lots of money to renovate and prepare for the next tenant.
3. For ‘Just Cause’, there are complex and very generous rights granted to tenants and a complex process for getting rid of bad tenants. This process and the process for mediation between renters and tenants often will go through a mediation board. Often, in Marin, the tenant can get free legal services. Mom & pop landlords pay out of their pocket and may be subject to additional fines and fees.
On the face of it, this is fine for tenants, but there are many unintended and expensive consequences for landlords, renters and homeowners.
1. Because these rules are complex, and the penalties for not getting everything correct from the landlords side of things can be severe and costly, many landlords are deciding not to rent out spaces. They feel there is too much financial risk. When the number of available rentals decrease and supply being constant, the starting rent for new rentals increases tremendously. Therefore anyone wanting to move into the area, or change their current rental location in the community, will face much higher starting rent.
2. Historically CPI is about 2%. Therefore the max rent raise in Cal is about 7%. On a $2000/mo place, that is $140/mo/year. Often times landlords don’t raise the rent yearly or at this level. With a potential rent cap that is below this, it adds pressure on the landlord to raise the rent every year just to keep pace with inflation and maintain adequate reserves for emergencies and standard maintanence. Also, a small potential increase, disincentivizes investment into new units or the upkeep of existing units.
3. Existing tenants get a better and better deal the longer they live in the place, so they have no incentive to move. This creates higher prices for new renters and doesn’t allow new, younger renters and families to move in. Those are often students or people working locally. This leads to older renters paying under market rates and getting a sweet deal, and younger workers who are just starting out, paying the ‘rent control premium’ just to live here.
4. The landlords will not be able to sell their homes/units without up to a year notice to tenants (in some cases) and not be able to sell without offering to buyout the tenant to the tune of tens of thousands of dollars. This is a tremendous liability. In addition, if the tenant does not wish to leave, then the house must be sold with the tenant in place, which usually means the seller has to have a discount on the property (ie it’s less valuable). Less desirable and less valuable houses bring down the price of ALL homes in the area, even those with out rental units.
These are some of the most onerous effects of extra rent control, beyond AB 1482. There are many more.
Marin is mandated to create more housing, not less affordable housing. Not having affordable housing will cost all of us in terms of taxes, transportation and city grants from the State, and other indirect costs.
Our goal is to make a democratic Marin more vibrant livable and affordable for everyone. Extra Rent Control ordinances create the opposite – towns that only the wealthy can afford, that are less diverse and more homogenous.
If you would like to support the cause of providing information and action surrounding the issue of extra rent control, please contribute to the Marin Residents PAC.