The One-Way Rent Control Ratchet

When California’s rent-control law was working its way through the Legislature in 2019, its author, Assemblyman David Chiu (D–San Francisco), said the policy was a necessary means of stopping the state’s most egregious rent hikes.

“We have millions of Californians who are one rent increase away from eviction and homelessness, folks who are struggling on the streets because they were subject to 10, 20, 100 percent rent increases,” he told journalists Liam Dillon and Matt Levin on their Gimme Shelter podcast.

Chiu argued his “anti-rent gouging” bill—which capped rent increases at the lesser of 5 percent plus inflation or 10 percent for most housing more than 15 years old—struck “the right balance between protecting tenants from egregious rent increases while providing landlords with the ability to make a fair rate of return.”

By addressing the immediate issue, Chiu said the state would have some breathing room to build the homes it needs to fix its housing emergency in the long term.

Fast forward four years, home construction rates have been basically stagnant in California, rents and home prices are up, and lawmakers are calling for tighter rent controls to fix the immediate housing crisis.

Earlier this month, state Sen. Maria Elena Durazo (D–Los Angeles) announced her intent to introduce S.B. 567, a bill that would lower the rent caps established in Chiu’s bill to inflation or 5 percent, whichever is less, according to the Sacramento Bee.

“We need to prevent homelessness, prevent people from being kicked out on the streets,” Durazo said. “That’s our goal with SB 567. This is an urgent humanitarian crisis in our communities.”

The existing 10 percent cap was allegedly the thoughtful, measured means of doing this. Now it appears that 5 percent caps are now necessary to get the job done.

Rent control is making something of a comeback in the United States as housing costs mount in even once-affordable parts of the country.

Proponents argue the flaws of old-school rent control policies from mid-century or the 1970s can be designed away with smart “rent stabilization” or “anti-rent gouging”