News

Rent control committee caps rent increases at 2.9% for 2020

Mountain View's Rental Housing Committee voted 5-0 this month to set the annual cap on rent increases to 2.9%, the lowest maximum increase allowed since the city's rent control law took effect in 2016.

The cap, which is adopted in May but takes effect in September each year, limits the annual rent increases permitted among the roughly 15,000 rent-controlled apartments in Mountain View. The cap reflects the rate of inflation, and must be based solely on the consumer price index (CPI) for the area.

Though the cap is lower than usual -- it previously hovered between 3.4% and 3.6% -- it does not account for the massive economic damage caused by the new coronavirus, which has prompted travel restrictions, closures of businesses and a requirement that most Bay Area residents stay indoors. That's because the maximum rental adjustment is based off of economic activity and cost increases spanning from February 2019 to February 2020, weeks before public health officials imposed the most severe restrictions.

Under the Community Stabilization and Fair Rent Act (CSFRA), the annual rent cap adjusts based on the rate of inflation, but cannot go below 2% or above 5% in order to offset more volatile years.

The cap may mean less this year than in the past, however. Though there are reports from Mountain View tenants that some landlords are raising the rent during the pandemic, rental housing costs are largely expected to dip in the coming months. City staff reported at a meeting on Tuesday that rents are down about 5% compared to before the coronavirus outbreak.

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At the May 4 meeting, committee members also signed off on a formal framework in which landlords and tenants can voluntarily agree to temporarily reduce rents during the pandemic, aimed at providing relief to families out of work due to the virus or the shelter order. These agreements would allow property owners to bounce rent back up to normal levels without running afoul of CSFRA's restrictions on annual rent increases.

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Rent control committee caps rent increases at 2.9% for 2020

by / Mountain View Voice

Uploaded: Wed, May 20, 2020, 3:16 pm

Mountain View's Rental Housing Committee voted 5-0 this month to set the annual cap on rent increases to 2.9%, the lowest maximum increase allowed since the city's rent control law took effect in 2016.

The cap, which is adopted in May but takes effect in September each year, limits the annual rent increases permitted among the roughly 15,000 rent-controlled apartments in Mountain View. The cap reflects the rate of inflation, and must be based solely on the consumer price index (CPI) for the area.

Though the cap is lower than usual -- it previously hovered between 3.4% and 3.6% -- it does not account for the massive economic damage caused by the new coronavirus, which has prompted travel restrictions, closures of businesses and a requirement that most Bay Area residents stay indoors. That's because the maximum rental adjustment is based off of economic activity and cost increases spanning from February 2019 to February 2020, weeks before public health officials imposed the most severe restrictions.

Under the Community Stabilization and Fair Rent Act (CSFRA), the annual rent cap adjusts based on the rate of inflation, but cannot go below 2% or above 5% in order to offset more volatile years.

The cap may mean less this year than in the past, however. Though there are reports from Mountain View tenants that some landlords are raising the rent during the pandemic, rental housing costs are largely expected to dip in the coming months. City staff reported at a meeting on Tuesday that rents are down about 5% compared to before the coronavirus outbreak.

At the May 4 meeting, committee members also signed off on a formal framework in which landlords and tenants can voluntarily agree to temporarily reduce rents during the pandemic, aimed at providing relief to families out of work due to the virus or the shelter order. These agreements would allow property owners to bounce rent back up to normal levels without running afoul of CSFRA's restrictions on annual rent increases.

Comments

Dan Waylonis
Jackson Park
on May 21, 2020 at 3:15 pm
Dan Waylonis, Jackson Park
on May 21, 2020 at 3:15 pm
6 people like this

Landlords needs to become more savvy like the government. Instead of "rent", start adding "usage fees" and "COVID-19 tax" to the monthly bill.


Libertarians
Jackson Park
on May 21, 2020 at 3:42 pm
Libertarians, Jackson Park
on May 21, 2020 at 3:42 pm
6 people like this

What's funny, Dan, is that all of us have plenty of experience with hidden fees and surcharges, and we all know where they come from: private corporations. Cell phone service, cable, online ticketing "convenience fees". Only a kneejerk Libertarian would be deluded enough to think otherwise.


sfcanative
Whisman Station
on May 21, 2020 at 9:32 pm
sfcanative, Whisman Station
on May 21, 2020 at 9:32 pm
Like this comment

Now that Facebook and Google have essentially given the green light for half of their workforce to never return to Silicon Valley, one can only imagine the exodus that is bound to occur in Santa Clara County as people wise up to the benefits of living in a less populated area and less restrictive state. Hello vacancy rate over 5% suspending CSFRA!

Rents are reportedly down 5% while landlords get a measly 2.9% increase. Sounds to me like we can stop worrying about a housing shortage and start enjoying the downturn.


Vacancy Decontrol
Blossom Valley
on May 21, 2020 at 10:09 pm
Vacancy Decontrol, Blossom Valley
on May 21, 2020 at 10:09 pm
9 people like this

MV's rent control law only applies to some units built before 1995 and not (initially) to units that turn over. It is called VACANCY DECONTROL and was and remains mandated by state law. How do landlords make more money on units that turn over? By raising the rent through the roof. Take a landlord with 100 units subject to MV's rent control. Say rents average $3,000 per unit per month. That is $300,000 per month or $3.6 million each year (not deducting for temporary vacancies). Suppose in the next year, 25 units turn over. The landlord then raises those rents to say $4,500 - an extra $1,500 from 25 units would be $37,500 per month or $448,500 per year. That is above and beyond the 3% increase under rent control for the other 75 units. For landlords with many units, vacancy decontrol is an extra GOLD MINE.


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