You Can Thank the Legislature for Your Next Big Rent Increase

Written by Scott Cook

Apartments in the San Diego neighborhood of Talmadge early this year. Photo by Megan Wood / inewsource

No one likes a rent increase, but as with all expenses, it is normal for rents to increase over time.
While reasonable rent increases are to be expected, a small number of owners have taken advantage of high demand for housing to impose larger rent hikes.

These rare instances of “rental price gouging” have made headlines, but they don’t reflect the reality of most renters in California. Unfortunately, new statewide legislation designed to address these isolated incidents could actually mean the majority of tenants in San Diego and across the state will see their rent payments increase every single year.

Having passed the Senate and Assembly this week, Assemblymember David Chiu’s Assembly Bill 1482 is now headed to Governor Newsom’s desk for his signature. It would create a government-approved annual increase to rental housing rates. While this legislation would indeed prevent owners from making dramatic rent hikes, it also has an unintended consequence: a strong incentive for owners to impose the maximum allowed rent hike, every single year.

Certainly, price gouging is wrong in any industry or trade — but the idea that gouging is widespread just isn’t backed up by statistics. The vast majority of property owners set reasonable rents and many haven’t raised rents annually, even in today’s strong housing market.
A severe lack of supply makes it expensive to purchase or rent a home in California, and the high price of homes is putting further pressure on the rental market. In San Diego County, AB 1482’s government-approved rent hikes would be more than double the average increase in rent over the past decade, according to data provided to stakeholders by the bill’s author and consultants in the California Assembly Housing & Community Development Committee. As a matter of fact, the data shows in the period between 2007-2017, the median annual increase in contract rent was 2.9%.

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