Renters are Suffering

At first glance, rent caps look like a win for renters. And certainly, in the short-run, lower predictable increases may protect some tenants. But over time, the policy may backfire — and not in the way city officials intended.

As units deteriorate, some landlords will withdraw properties from the market entirely — converting apartments to condos, selling to owner-occupants, or simply taking them off rental registers. This is a well-documented risk under rent-control regimes that don’t allow for full cost recovery. 

That exodus tightens supply — which pushes prices up for non-rent-controlled properties, reduces real availability, and makes vacancy rates even tighter. Given that California has suffered a housing shortfall for decades — with estimates of a 3 million–unit shortage statewide — shrinking supply is not a nuance; it is a catastrophe. 

Furthermore: even though costs like insurance and maintenance have risen dramatically, a recent empirical study found that asking rents for multifamily properties rarely adjusted in response. In other words, landlords did not, or could not, shift higher insurance costs onto tenants — even where allowed. 

What that suggests is clear: when caps are tight but costs are surging, landlords absorb losses — until they can’t anymore.