Studies consistently demonstrate that price controls cripple the commodity they regulate. This appraisal holds true in the California communities that enforce price ceilings on rents.
When rent control is in place, developers have fewer incentives to build apartments, exacerbating housing shortfalls. Likewise, owners of rent controlled units have scant motivation to maintain their units, let alone make upgrades. Even as communities fall into disrepair, prices across the market rise because new housing isn’t getting built.
Meanwhile, rent controlled frequently aren’t occupied by the people they are intended to help. Often, middle- to high-income professionals secure rent controlled units, and once they’re in place, remain entrenched for years, if not decades.
Lower-income workers and their families are relegated to higher-priced housing, far from jobs and schools.
Despite opposition from the California Apartment Association, the Inglewood City Council on Tuesday unanimously approved a permanent rent control ordinance, capping rental increases for most affected apartments at 5% per year.
Council members had been expected to vote on an 8% cap, however, they agreed to lower that limit amid pressure from tenant activists at the meeting. An 8% increase will still be allowed under certain circumstances, such as after long periods of keeping rents below 80% of the median price. Rents would again be capped at 5% after reaching market rates. Owners making improvements costing $10,000 or more also would qualify for 8% rent increases.
Under state law, the rent cap will apply to multifamily housing built before 1995.
The council also approved a so-called “just cause” eviction policy that will apply after two years of tenancy. Such policies require owners to prove “cause” in court or before a political body every time they need to remove a problem resident. To terminate at tenancy without cause, a landlord will have to pay relocation fees equal to three months’ rent. The council previously considered relocation fees equal to nine months’ rent but lowered the figure.
CAA’s opposition to the ordinance was wide-reaching and included an email campaign by members.
The council will need to approve the ordinance once more, with a second reading, to formalize adoption of the policies. The city’s current moratorium on rent increases over 5% is expected to be extended at next week’s meeting and be in place until the permanent measure takes effect.