(Bloomberg) -- A bill that would limit rent increases in California for a decade cleared another hurdle in the legislature, advancing a proposal championed by Governor Gavin Newsom to address the state’s housing crisis.
The measure, which allows landlords to raise rents by 5% a year plus inflation -- or a total of about 8% -- and sets a higher bar for evictions, was passed by the Senate on Tuesday, 25-10. It now heads back to the Assembly, which has to concur on amendments made in the Senate, before lawmakers adjourn on Sept. 13.
Legislators in the state introduced a flurry of bills this year aimed at addressing skyrocketing rents and home prices, only to see the vast majority of them fail to advance. That put pressure on Newsom, who campaigned last year with the promise of building 3.5 million more homes in the state, to get some of the remaining legislation passed. Another key bill that will speed up the permitting process and limit cities’ abilities to slow or block new development passed last week.
That left the rent cap as one of the big remaining question marks for the real estate industry. After supporting an earlier iteration of the legislation, the powerful California Association of Realtors came out against it, saying it “discourages new rental housing.” But the California Apartment Association, which represents landlords, has said it will remain neutral after successfully lobbying for changes.
Even if the bill is signed into law, it’s somewhat limited in scope. Landlords can reset rents higher when tenants vacate a unit, and it provides a carve-out for single-family rental homes that aren’t owned by corporations. Housing built in the past 15 years is excluded from the caps.
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