Oakland Adopts Emergency Rent ControlApril 6, 2016
A whittled down 90-day moratorium on rent increases that surpass the annual change in the Consumer Price Index (which has been running around one percent per year) was adopted by Oakland’s City Council early this morning.
A proposed provision which would have also prohibited evictions without cause was eliminated from the emergency ordinance. And thanks, or curses, to California’s Costa-Hawkins Rental Housing Act, the moratorium will not apply to units constructed after 1983.
Comments from Plugged-In Readers
“Dr.Ellis. Calling Dr. Ellis. Please pick up the white courtesy phone.”
Rent control. How Bernie.
Indeed! Looks like Ellis Evictions are coming to Oakland lickety-split. Wonder if they will try to block state law.
Whole lotta nothing.
eviction and rent increases how trump
Trampling on private property rights, how soviet.
There is no such thing as private property. Fall behind on your tax bill and see how private your property is. Or maybe your house is in the way of something the government wants.
Errrr right….that makes a lot of sense. Not meeting your obligations or a very rare case of eminent domain = no property rights.
You don’t or can’t pay the IRS, they take your house and land. Makes sense. Freedum!
This makes no sense, those things aren’t related. That’s like saying freedom doesn’t exist because if you murder someone and get arrested, see how free you are then.
More Ellis evictions, also if this goes to court, as I think it might, it will not hold up in court.
Given that the eviction restrictions were stricken from the moratorium I don’t see why it wouldn’t stand up in court. The moratorium is more lenient than SF rent control (CPI rather than 60% of CPI) and the SF provisions have held up in court.
Of course, if landlords in Oakland are smart, once the moratorium is over it would be wise to raise rents to the maximum amount possible. And if I was a owner-occupier of a smaller building it might be time to sell. Rent control of these buildings is obviously in the works.
Writing is on the wall. Problem would be finding potential investors/buyers for these down the road rent controlled buildings. Market rents may be high now in Oakland because SF has priced out many and forced renters to move to Oakland. Once the Bay Area’s economy slows, people will move out of their pricey Oakland apartments to something cheaper.
I briefly thought about buying something in Oakland, and have spoken to several people who own in Oakland. Ultimately I decided to pass because the timeline for appreciation is too long and the risk of a downturn is too great at this point.
“timeline for appreciation is too long and the risk of a downturn is too great at this point”
Just curious if you can quantify the timeline and risk? Mine is: there is 50% chance that it will take about 5 years for 30% appreciation , and a 50% chance for 30% drop in value in the same time period.
I will buy when I see the 30% + drop in the next five years.
There are reasonable and balanced ways to do rent control instead of this absurd market fixing. A very simple formula would be:
1. Allow increases up to 10%
2. Notification period is 1 month per % increase
3. No new increase can be notified within 12 months of the effectiveness of the last increase
This would give tenants a very reasonable amount of time to adapt their financial situation or find new housing if they can’t, and it would allow the market to adjust to new conditions including downwards. If certain types of renters deserve protection from the market forces then “someone” needs to subsidize those renters. But nobody is entitled to a $600 Nob Hill apartment for life at the unlucky landlords’ expense.
Yes, those poor unlucky landlords who purely by random chance happened to borrow cheap money to buy a RC building, getting their new tenants to pay the mortgage off, with a mortgage interest deduction to boot. Cruel, hateful world! OMG, everywhere you look, it’s nothing but poor landlords prevented from obtaining maximum windfall “economic profit” on buildings they weren’t forced to buy! Oh, the humanity. Not to mention those unwholesome socialists Adam Smith and David Ricardo, who said that landlords were little more than lazy parasites on the productive economy, producing no value of their own, siphoning off the value capitalists and workers created. How dare they! Why does everyone pick on the poor oppressed landlords?
Every time I read one of your posts I assume that those two beers you’ve had are 750 ml barleywines with 18% alcohol. It’s the only logical explanation.
A landlord whose tenant ends up staying for 30 years at a “controlled” rent is unlucky. Landlords as a whole are not. Is that clear enough?
Serious question. Why allow increases up to 10%? Why not just tie it to CPI, which hovers around 2-3% annually?
Because CPI isn’t a local housing market indicator, it’s a regional (Bay Area MSA) index of general cost of living.
Sudden increases in local demand drive up housing prices far more than CPI, so capping the increase leads to distortion as we’ve seen. Under strict rent control, when a unit hits the market the landlord has to add a risk premium to the listing rent because the tenant could stay for 30 years. And in a downturn the landlord is better off letting the unit sit vacant for a year or two (or listing it on Airbnb) than reducing the rent to reflect fair market value.
Capping increases at the CPI also prevents a landlord from recovering reasonable improvement costs, which is one reason so many rental properties in this city are in poor condition.
I think setting the annual increase to CPI, although better than SF allows, disregards the fact that expenses can increase at a much greater rate than CPI. In addition, it would still be a form of price controls with the inherent market dislocations.
In reality this measure is largely symbolic. It temporarily expands Oakland’s existing rent control ordinance within the limitations of Costa Hawkins (adding 2-3 unit owner occupied buildings) and delays rent increases in excess of the existing CPI allowance on covered units.
Big whoop. Wait the 90 days, then max the increase. I’m sure that many LL’s that weren’t diligent about rent increases will wake up now that this inane legislation was passed.
Way to go Oakland. Looks like you just pulled an SF-law-of-unintended-consequences stupidity move too!
Wait the 90 days? “Temporary emergency policies” tend to become “rights” before that 90 days expires. Remember how SF’s rent ordinance was a “temporary emergency policy” back in 1979?
How weird?? No housing built in Oakland and rents increased!!!?? Let’s push through the pipeline and then we will have a non-issue here.
No, you have that backwards. When you REFUSE to build new housing, rents magically go down. Supply and demand is a conspiracy, even though you have tens of thousands of people competing to live in the same area that should make rents much lower.
Of course, for that to work you also need to vandalize a few tech commuter buses and assault their riders. But that’s pretty easy to do because they run on a schedule, and it’s also quite risk-free because the leftist reactionary Supervisors will never allow your angry mob to be prosecuted.
That is the big downside risk. Furthermore, more employers must be situated in Oakland making the residents of the city self-sustaining with jobs (not having to commute to SF to work.)
90 days? Emergency?
See you in 30 years guys
Thanks for the article. The ordinance was not whittled down. That is an error on the part of the Chronicle. Both the community’s draft and the final ordinance allow only evictions for “just cause,” and mandate that the city publicize.
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