Anti-price gouging law continues to protects tenants during state of emergency

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California Gov. Gavin Newsom’s October declaration of a state of emergency has drawn attention to certain protections imposed by a California law preventing businesses from unfairly raising prices during times of crisis.

With few exceptions, the anti-price gouging law prohibits businesses from raising prices on crucial goods and services, including rental housing, by more than 10% during a declared state of emergency. The law’s “vacancy control” provisions also bar landlords from raising the advertised rent price by more than 10% of what the former tenant paid before moving out.

“The rent caps for new tenants pursuant to the anti-gouging statute are especially important to student tenants,” said Julia Cato, chair of the Berkeley Tenants Union, in an email. “Since this group tends to move frequently, and every time a tenant vacates a rent-controlled apartment, the rent then goes to market rate, except when a declaration of emergency is operative.”

Until the 1995 Costa-Hawkins Rental Housing Act issued statewide prohibitions on most kinds of rent control, the city of Berkeley had similar vacancy control protections in place.

Although the anti-gouging law has been in effect since former California governor Jerry Brown declared a state of emergency during the 2017 wildfires, Newsom’s declaration last month drew renewed attention to the statewide rent control imposed by the law.

“This is not a new law,” said Leah Simon-Weisberg, Berkeley Housing Advisory Commissioner and vice chair of the Rent Stabilization Board. “It’s essentially to prevent war profiteering, or in a modern society, natural disaster profiteering.”

The price gouging law, or Penal Code 396, was passed in the wake of the 1994 Northridge earthquake, during which there were widespread reports of price gouging on essential goods like batteries and bottled water, according to California Attorney General Xavier Becerra’s press office.

There have previously been problems with enforcement of the law, according to Simon-Weisberg, but now with annual wildfire evacuations, enforcement has been ramped up. In 2018, Becerra filed charges against a real estate agent in Novato and a Marin County landlord and realtor for allegedly raising rents “well beyond” the 10% limit.

Rent gouging and evictions have been on the rise in California since September, according to Cato, when the state legislature passed AB 1482, which caps annual rent increases and protects against arbitrary evictions. Cato said she expects that landlords are working to increase rents before this law goes into effect January 2020. There are local institutions that renters — students in particular — should be aware of if they see an increase in their rent.

“Anyone who has received a rent increase in excess of 10% (or moves into an apartment that has had a rent increase of more than 10%) since September 2017 should contact the Berkeley Tenant’s Union, East Bay Community Law Center, the Berkeley Rent Stabilization Board (or a tenants rights attorney for further information and evaluation,” Cato said in the email.

Contact Jacob Souza at [email protected] and follow him on Twitter at @jsouza_dailycal.