Groups Call on California Lawmakers To Overturn Anti-Rent Control Law

Friday, November 17, 2017
Kevin Oliver
NBC (Sacramento)

A state senator and tenants rights group are working to overturn a decades-old law that prohibits rent control on homes.

In the wake of a KCRA 3 investigation into the corporate ownership of single-family homes, advocates want the state to change the Costa-Hawkins law, which passed in the 1990s and prevents rent control for single-family homes. Over the past year, rents for single-family homes have increased by more than 10 percent.

Tenants rights groups said one company owning too many homes in a region can have a significant impact on the rental market.

Blackstone Group, operating as Invitation Homes, owns 50,000 homes across 13 U.S. cities. In Sacramento County, Invitation Homes is the second largest property owner – second to the city of Sacramento.

Blackstone is poised to merge with another large investment group, Starwood/Waypoint Homes – effectively doubling the size of their properties across Northern California.

Tenant rights groups said companies like Blackstone, which currently owns 1.5 percent of the homes in Sacramento County, are major players in the rental market because most investors own one to two homes. If the company raises rents, smaller investors will follow suit.

"While the initial rent prices were relatively affordable for the communities who are moving in, we've also heard several stories of people who have gotten really stiff rent increases," said Christina Livingston, with Alliance of Californians for Community Empowerment.

Livingston added that renters have seen their lease payments "suddenly going up by, you know, $1,000, $1,100 from month to month."

Investors are allowed to do that because of the Costa-Hawkins law.

State Sen. Nancy Skinner saw KCRA 3's investigation and wants to gather data on how much influence corporate ownership has on the market. She's also working with her colleagues on what is now a two-year bill to overturn the Costa-Hawkins law.

"We are in a housing crisis -- and that crisis is a supply crisis,” Skinner said. “So yes, it's an affordability crisis, but why? Because we do not have enough supply. So, when you don't have enough supply, any owner can charge more than they might otherwise get when you don't have enough supply.”

Advocates for home investors disagree. The Rental Housing Association said capping rents will hurt the market.

"Yes, there have been investors that have come in from Wall Street, that have bought up, you know, hundreds of properties," RHA spokesperson Jim Lufgren said. "But, there's thousands of properties out there. And so, the real problem is a shortage of housing, and I think that the investors from Wall Street are only buying a small segment of the market."

Lufgren said there is an overall housing shortage. But, he believes that putting rent control in place will drive away investors and do nothing to help the shortage.

"If you expand rent control to include single-family homes, you're going to discourage the investment in California -- and what we need right now is more investment in housing not less," Lufgren said.

Lufgren believes increasing the supply comes with a bond initiative that would pay for more low-income housing. That initiative is on the 2018 ballot.

ACCE disagrees with RHA and said Costa-Hawkins needs to be overturned. If it is not done by the legislature, ACCE has already filed a ballot initiative with the California Secretary of State to overturn Costa-Hawkins.

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