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What Rent Control Laws in San Diego Mean for Landlords

Greg Flaherty - Friday, October 4, 2019

Rent control is on its way to San Diego, and if you’re a Landlord, you’re probably not going to be thrilled with that. If you’re a Tenant, you’ll likely welcome it.

Today, we want to talk about what Rent Control – or rent stabilization – might mean for you and your San Diego rental property.

What Rent Control Means

We have been watching the changes in the law carefully, and here’s what we know so far.

There is a pretty good chance that Rent Control is coming to San Diego and the rest of California. It has already passed the California State Assembly, and it’s coming up for a vote soon in the California State Senate.

If it’s approved there, it will be signed into law by the Governor of California. If Rent Control is passed, this means that there will be a base maximum increase of 7 percent that a Landlord can do each year. In addition to that increase, you can include the consumer price index, or CPI, as it’s referred to. Currently, that’s at around 2.5 percent on average.

Basically, if this law was active right now, the most a Landlord could increase the rent would be the base of 7 percent, plus the 2.5 percent on top of that to cover the CPI.

Raising the Rent According to Market

This may not seem like a big deal because many Landlords do not even increase rent each year by more than 9.5 percent.

But there are occasions when the market has been red hot, and Landlords have been able to increase the rent even more. What we know is that everywhere that rent control has been tried before, Developers and Contractors have stopped building apartment complexes and condos. Landlords end up exiting the marketplace. Then you find less supply for lower income families looking for affordable housing.

Understanding Just Cause Eviction

This bill also includes something called Just Cause Eviction. With Just Cause Eviction laws, Landlords can only evict a Tenant for three reasons:

Any other circumstances will not be covered, and the Landlord cannot evict. Landlords can have a really difficult time getting rid of bad Tenants.

Say you have a situation where you have had a Tenant for three years, and you simply want to move back into the property. Or maybe you have family that you would like to move into that property. That will not be considered a valid reason under this law, and you would not be able to get rid of the Tenant.

Making improvements to rental properties will not make a lot of sense to Landlords with these restrictions in place because the profit margins are not there.

Understanding Just Cause EvictionAll in all, I think that Rent Control laws hurt people, and there is probably a 50/50 chance this will be signed into law. If you are a San Diego Landlord, you really need to pay attention.

If you have any questions about Rent Control, please contact us at Penny Realty. We’d be happy to discuss this topic further.


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