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Millions of renters across California face double-digit rent increases next month despite the state’s rent control law that typically caps rent increases at no more than 5 percent per year.
The reason? A clause in the state’s 2019 rent control law allows landlords to increase rent by up to 10 percent depending on inflation. And inflation is high enough to trigger the maximum increase, the Los Angeles Times first reported.
Starting next month, the owners of millions of units in every region of the state can start charging more. Despite being the most allowed under state law, the 10 percent hike is still lower than the national rent increases over the past few years.
In 2019 the state legislature passed the California Tenant Protection Act, which set a rent cap of 5 percent plus inflation, not to exceed 10 percent total.
“A 10 percent rent increase can make a huge difference in a family’s economic stability,” Shanti Singh, spokesman for the tenant advocacy group Tenants Together, told the L.A. Times.
The law may actually have prevented rent from increasing more as the cost of rent for single-family homes nationwide was up 14 percent through May compared to the year before.
The law applies to homes that are 15 years or older and aren’t already deed restricted. It also doesn’t take the place of local regulations that might be stronger than the state law. Properties are also exempt if they’re not owned by a trust, corporation or LLC and the landlord has provided written notice.
More than 20 cities across California have other tenant protection rules in place that may also dictate how much landlords in those cities can raise rent.
Rental properties are generally considered a good hedge against inflation. For the Apartment Association of Greater Los Angeles, the inflationary data is a good news bad news situation.
The good news according to the group is that landlords can raise rents by the maximum 10 percent allowed by law.
“But the obvious bad news is that inflationary pressures have led to rapidly increasing prices for all goods and services,” the organization wrote in an update for landlords in May.