Rent Control in California

In the case of Guggenheim v. City of Goleta, a 2009 case, a lower court ruled against the property owner. Because it’s a rent control case, the case could set precedent allowing cities throughout California to revisit the rent control question.

CAA’s legal fund filed as brief asking the Supreme Court to review the lower court’s ruling.  In the brief, CAA argues that rent control has been shown to decrease the quality and quantity of affordable housing, also arguing that rent control has been linked to “high-priced shadow markets” and has disproportionately benefited high-income renters. They say rent control laws—originally created to protect renters from landlords making huge profits—create artificial restraints that are detrimental because they prohibit landlords from charging what prices the market will allow. In turn, they argue, this means landlords don’t have the extra cash on hand that they might otherwise invest in new housing or improving existing housing.

From the opposite perspective in the rent control debate, rent control is a necessary form of protection. Without rent control—also known as rent stabilization—tenant rights defenders say unscrupulous landlords could threaten tenants with rent raises if the tenants complained about defects in the property.

Since the case at hand is in California, it may be useful to know that with rent stabilization, landlords are free to set vacant units at market prices; it’s just that once the unit is rented, all increases that follow are capped at a set percentage. San Francisco is one large city with rent stabilization.

MultiHousing News Online reported that a representative of the National Multi Housing Council and the National Apartment Association testified before a key subcommittee of the House Financial Services Committee that the Department of Housing and Urban Development is failing to keep pace with the volume of multifamily mortgage applications.

© Katie Matlack

Jun 2011