Written By: Jade Jasso | November 5th, 2021
While many cities throughout the state of California have adopted rent control policies, this has not been the case for Orange County. That is until this past October 19th, when the Santa Ana City Council (4-3) successfully passed a rent control motion into law. Santa Ana will now have a 3% cap on annual rent increases for apartment structures and mobile home parks. Moreover, Dennis Lynch from The Real Deal further states that this law gives tenants added protection as there now must be just-cause for eviction. For a better understanding of what now outlines a just-cause eviction, you can visit the City of Santa Ana’s updated explanation. This rent cap and just-cause eviction law only applies to apartments built before 1995 and mobile home parks before 1990 according to the Voice of OC, and will go into effect November 19th 2021.
Victor Cao, Senior Vice President of the CAA says “These laws must be put on hold so the public can fully understand the ordinances adopted by the council, and the people of Santa Ana should decide if this is the housing policy they want for the city.”
The passing of this measure comes as a surprise to some, but not to all. As La Times reports, local organizations in Santa Ana have a decades long history of rallying for rent control. Only recently have proponents of these measures gotten rent control successfully on the ballot.
Rebecca Diamond, an associate professor of Stanford Graduate School of Business has much to say on the topic of discussion. Her article on Economic Evidence of Rent Control found that rent control helps create affordable housing in a short term span. There are also existing reports From UCLA’s school of Public Affairs that state rent controlled housing creates tenants who are recorded to rent for longer periods of time. It was examined in the city of Los Angeles and Long beach that rent controlled housing had more tenants rent for long term versus tenants in non-rent controlled housing.
Though some local governments are just now entering the rent control conversation, many areas already have long standing rent stabilizations in place. The City of San Francisco established their Rental Stabilization Ordinance in 1979. Similarly, other cities down the California coast in LA County established their RSO’s that same year or prior. The cities of Los Angeles, Beverly Hills, and Santa Monica were among the first in the Southern California region to approve such ordinances.
Our state and local governments are actively passing rental policies that will considerably change housing. This in turn will impacts how commercial real estate investors seek out real estate. It is becoming increasingly clear that for better or worse, California is moving in a direction that is open to rent control. Surrounding cities in Orange County may now look towards Santa Ana to see where the positive and negative externalities lie for renters, landlords, and investors.
It is important that your voice be heard in these debates. We encourage all investors and community members to join us in the discussions surrounding rent control and how it impacts our communities. Contact the Santa Ana Mayor and City Council here.
We are ready to assist investors with Santa Ana multifamily properties. For questions about how rent control may impact you or your investments, contact your Orange County commercial real estate advisors at SVN Vanguard.
