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Finding Common Ground on Rent Control
Publication Date
University of California Berkeley, Terner Center for Housing Innovation
This policy brief explores the conflict between calls for rent control in California and for relief from regulations that inhibit housing development and otherwise exacerbate the imbalance of housing supply and demand. After presenting information on the 1995 Costa-Hawkins Rental Housing Act (restricting local governments' authority to impose rent controls) and the effects of local rent control adopted in Massachusetts and California between 1970 and 2000, the authors propose two policies to protect renters and increase the supply of affordable housing. The authors claim that the two proposals "thread the needle between what is needed and what is possible" under current political conditions. The authors also admit that the proposals would not solve the state's housing crisis and expect other housing policies to be developed to address the housing crisis.

One policy, an "anti-gouging cap," is inspired by existing California law that allows localities to limit rent increases to no more than 10 percent during a declared disaster or state of emergency. The proposed policy would be statewide, enacted to provide stability and predictably regardless of a disaster declaration. The cap would be based on the annual regional or state consumer price index plus 5 percent but not to exceed 10 percent; the cap would equal the price index in years when the index exceeds 10 percent. The cap would apply to all rental units regardless of the tenant's income. However, the cap would not apply when tenants in a unit change (the new tenant could be charged rent greater than the capped rent of the former tenant).

The other policy would create a property tax waiver for multifamily rental developments that voluntarily include units with rents that are below the market rate. The authors suggest that the statewide baseline should be at least 10 percent of the units affordable to households earning no more than 120 percent of the area median income. Within these limits, the policy would give cities flexibility to establish rates of set-asides and affordability levels that best accommodate their housing conditions. The tax abatement, which would apply to the increase in property value, and income restriction should last for 15 years.

Note: Guidance documents, except when based on statutory or regulatory authority or law, do not have the force and effect of law and are not meant to bind the public in any way. Guidance documents are intended only to provide clarity to the public regarding existing requirements under the law or agency policies.