Opinion: California’s housing shortage will worsen if it makes it more difficult to own rental property.

The fact that California needs a law allowing landlords to go out of business says something about the state’s broken housing market.

However, that is the truth. Because of significant negotiations with landlord groups and tenants’ associations that took place over a period of several years following the passage of the Ellis Act in 1985, it has been on the books ever since.

 

 

This new regulation was inspired by an impractical Santa Monica ordinance that required landlords to get city permits before removing rental units from the local housing supplies.

Individuals with low or moderate-income could not get a permit, nor could the city if it concluded that this action would have a negative impact on the availability of homes. Due to poor rental prices, owners in the city were unable to maintain their properties, and the law prevented them from going out of business.

People could not transfer their families into their own homes or sell the buildings they owned to others who wanted to buy and live in them under that situation.

When a municipal rental control ordinance is in existence, the Ellis Act is not essential. Tenants are well-protected (they must provide a year’s notice and pay a hefty relocation fee) and landlords are barred from circumventing rent control laws.

It is possible for a city to ban a property owner from converting a building back to rental housing and renting it at a higher rate if the building is converted to ownership housing. A new building that replaces a demolished rental property could be required by city ordinances to be subject to rent control as well.

It is not permitted to employ the Ellis Act to convert the rent-controlled property into market-rate housing.

There are very few cases in which the Ellis Act is invoked. Only 107 of the city’s 226,00 rental homes — or 0.047 percent — were affected by it in 2020, according to data from San Francisco. Because of their diminutive size even in these difficult circumstances, the buildings

There are still some instances where it gives common-sense protection.

Even current renters can pool their resources to buy a small rental property, and the Ellis Act authorizes the landlord to sell it to them and allow them to relocate.

It is now possible for households to combine two or three smaller homes they own into a single larger home to accommodate elderly parents or extended family, according to the Ellis Act of 2007.

If your idea of rental housing is a sprawling apartment complex or a high-rise apartment building, it’s time to broaden your horizons. According to the Department of Housing and Urban Development, about half of all rental homes in the United States have four or fewer units.

The Assembly properly rejected a bill that would have undermined the Ellis Act and reopened the door to arbitrary restrictions.

A broken housing market that has pushed the cost of ownership out of reach for many Californians, driven rental rates higher, and generated an increase in homelessness is the reason this ill-thought-out bill was able to make it to the Assembly floor.

There was nothing in this bill that would have alleviated any of it.

Having a regulation to protect building owners who need to abandon the rental market in rent-controlled areas is ridiculous.

Instead of a bill like this, we should be focusing on the critical issue of fixing California’s housing crisis—taking policies that will encourage additional housing stock, improve affordability, and provide safe shelter for those who are homeless.