On January 1, 2025, California ushered in a historic overhaul of its rent control laws, marking the most significant change in nearly two decades. The new legislation, led by Governor Gavin Newsom and supported by the California State Legislature, imposes stricter rent increase caps on older multi-family properties that were previously less regulated. This move aims to make housing more affordable in a state where rental costs have continued to rise sharply over the years, particularly in urban centers like Los Angeles and San Francisco.
The most notable feature of the new law is the introduction of a cap on annual rent increases. Under the updated rules, landlords are now limited to raising rent by no more than 5% of the current rent or $100 per month, whichever amount is lower. Additionally, landlords are allowed to implement rent hikes only once every 12 months. These restrictions apply exclusively to properties built before 1995, which makes up a large portion of the state’s rental housing stock. Newer buildings, those constructed after 1995, are largely exempt from the new rent control measures.
For tenants, especially in the state’s most expensive cities, this legislative change is seen as a significant victory. Tenant advocacy groups have long campaigned for stronger rent control measures, arguing that rising rent prices have priced many low- and middle-income residents out of the housing market. With the new cap, these groups believe the law will provide much-needed relief to renters, offering more predictable costs and a greater sense of security in an uncertain market.
However, the law has not been without its controversies. The California Apartment Association (CAA), which represents landlords and property owners across the state, has expressed strong opposition to the new regulations. According to the CAA, the rent caps and restrictions on frequency of increases will severely limit landlords’ ability to generate sufficient revenue from their properties. They argue that the regulations may result in deferred maintenance, reduced investment in property upkeep, and a potentially shrinking rental inventory as some landlords may decide to sell their buildings rather than deal with the limitations.
One of the primary concerns raised by landlords is the increased difficulty of managing rising operational and maintenance costs. While the rent increase caps may protect tenants in the short term, landlords are worried that they will be unable to keep up with inflationary costs and the general expenses associated with maintaining older buildings. In turn, this could lead to a reduced supply of rental units, further exacerbating California’s ongoing housing shortage.
Despite these concerns, proponents of the law argue that the long-term benefits to tenants will outweigh the potential drawbacks for landlords. They believe the new rent control measures will contribute to a more balanced and stable rental market, particularly in California’s most rent-burdened areas. The law is also expected to encourage greater investment in affordable housing and spur further legislative action aimed at addressing the state’s housing crisis.
As California moves forward with these changes, the debate between affordability and profitability is likely to continue. Tenants and housing advocates will keep a close eye on how the law is implemented, while landlords may push for future revisions. The broader implications of these changes on the rental market will unfold in the coming months, with both sides of the issue awaiting their next move.
The long-term effect of this law may well be a more stable housing environment in California, though its full impact will only become clear as more data and feedback emerge from tenants, landlords, and housing experts alike.