Rent Control Laws Spread: California Caps Increases at 5% for 2025

By Tristan, Contributor
March 21, 2025 – 12:00 PM PDT, Sacramento, CA

Governor Gavin Newsom signed a sweeping rent control bill today, capping California increases at 5% for 2025 across all cities, expanding a 2019 law as median rents hit $1,800—up 4% from 2024. The Tenant Protection Act 2.0, effective July 1, covers 80% of the state’s 17 million renters—$1,800 can’t rise past $1,890, saving $50 monthly versus market 7% hikes. Newsom called it “relief for working families” at a Sacramento signing.

The push reflects strain. Rents rose 20% since 2020—$1,500 to $1,800—outpacing 15% wage gains ($35 hourly), per BLS; 50% of renters spend 30% of income—$1,800 on $60,000. San Francisco’s $2,500 and L.A.’s $2,000 lead—7% jumps hit $2,675 and $2,140 without caps. The 2019 law—5% plus inflation (7% total)—covered 60%; now, small landlords (under 10 units) and new builds (post-2010) join, adding 2 million units.

Landlords balk. The California Apartment Association (CAA) says 5%—$90 on $1,800—lags 6% cost rises (property tax, maintenance); $1 billion in upgrades stall. Exemptions shrink—pre-1995 units only got 10% hikes; now all cap at 5%. CAA’s Fred Sutton warned “supply dries up”—new starts, off 15% (see today), worsen; $600 lumber adds $20,000 per unit. Rents might freeze—10% of owners hold rates, per CoStar.

Tenants cheer. Renter Jane Lopez, 32, with $2,000 in L.A., saves $100 versus $2,140—$1,200 yearly for groceries. Advocacy like Tenants Together, with 50,000 members, pushed—$1 billion in evictions loomed without it; 5% keeps 100,000 housed, says UC Berkeley. Newsom tied it to jobs—claims at 200,000 (see today)—“stable rent keeps workers here.”

Enforcement’s beefy. A $50 million state fund adds 200 inspectors—fines hit $10,000 per violation; 2024’s 5,000 cases netted $20 million. Cities like Oakland, at 3% caps, align—$1,600 rises to $1,650, not $1,680. Landlords can “bank” unused hikes—skip 2025, take 10% in 2026—but 80% apply yearly, says CAA. Evictions for non-payment, down 10%, hold—$1,800’s still steep.

Risks linger. Supply’s 2.5 months—half the 6-month norm—$1,800 might climb if builds lag; $2,000 by 2026, per Zillow, caps or not. Investors eye exits—$1 billion in multifamily sales Q1, off 5%; cap rates (profits) at 4% squeeze. Newsom’s $500 million housing fund—$200,000 per unit—aims 25,000 homes by 2027, but lumber’s $600 slows it—$5 billion’s the real need.

Other states watch. New York’s 4% cap, Oregon’s 7%—10% of U.S. renters capped—spread; Texas resists—$1,500 medians rise 6%. California’s $1 trillion economy leans on rent—$300 billion yearly; 5% saves $15 billion for tenants, cuts landlord $5 billion, per CBRE. Newsom’s July rollout eyes 2026—$1,890 holds if costs tame.
​
For now, it’s law. Lopez and 17 million breathe easier—$1,800 to $1,890’s a win. Landlords adjust—5% nets $1 billion less; $1,800’s the line. California’s rent war shifts—tenants gain, supply’s the next fight.