At the start of 2020, California became the second state to enforce rent control. Under the new law, landlords will only be able to increase rents for existing tenants by 5% annually plus inflation until 2030. However, these rules only apply to apartments built before 2004. While these changes are meant to reduce the state’s affordable housing crisis, they could end up hurting both landlords and tenants in the long run.    

Impact on costs and housing availability 

Rent control can hurt landlords by forcing them to keep some tenant rents below market value. Sadly, this can create a financial burden for them, as they may have to spend more money to maintain their units. That’s because landlords still have to pay holding costs associated with the units they operate including utilities, taxes and insurance payments 

These circumstances over time could disincentivize landlords to invest in other properties, leaving less options for prospective tenants. In San Francisco, for example, landlords were more likely to convert their apartment buildings into condos after the city enforced its own rent control policies in the 1990s.  

On top of rent caps, California’s new law also makes it more difficult to evict current tenants. To do so, landlords now have to have probable cause. 

Disputes could become more complex 

Landlord and tenant relations can already be tense here in Los Angeles. While the city has its own rent control provisions, new state laws could complicate matters even more. Luckily, landlords and real estate property owners can benefit from the assistance of an experienced real estate law attorney, who can help them understand their rights and address any concerns they may have.