It now advances to the Senate—with big changes under a compromise with the California Association of Realtors

A proposal to place a cap on rent hikes statewide was approved in the California Assembly late Wednesday and will now advance into the Senate—with major changes to appease a powerful group of realtors.

The Mercury News reports that “because of an 11th-hour handshake deal” with the California Association of Realtors, the rent caps proposed under Assembly Bill 1482 are now higher: 7 percent, plus the rate of inflation, which averages about 2.5 percent in California.

Before the compromise, the bill had established a cap of 5 percent, plus inflation.

Additionally, the limits now have an expiration date—of 2023—and would not apply to property owners with fewer than 10 single-family homes.

The Mercury News reports that the changes “prompted the realtors’ trade association to finally withdraw its opposition after weeks of intense negotiations.”

It passed the Assembly on a vote of 43-28.

René Christian Moya, director of Los Angeles-based Housing Is A Human Right, the housing rights division of the AIDS Healthcare Foundation, said the changes “watered down” the bill and give a “raw deal” to renters.

“There is a real danger that many landlords will see the rent cap as a new floor, handing tenants 10-percent rent increases year after year,” he said.

But even with the changes, other groups say the proposed legislation will protect tenants from rent gauging. Uplift Inglewood called it an “amazing step forward to protect renters.”

AB 1482 would apply to all types of rental properties, except those already subject to local rent control laws.

It would not impact renters in the cities of Santa Monica, West Hollywood, and Los Angeles, cities that already have rent control laws on the books. In the city of Los Angeles, property owners of rent-controlled buildings are right now allowed to raise rent 3 percent.

AB 1481, a “companion” bill to AB 1482 that would have made it illegal for landlords to evict tenants without “just cause” failed to come up for a vote on Thursday. It is now dead for the year, as Friday marks the deadline for all bills in the House to advance.

Under AB 1481, landlords would have been barred from evicting tenants unless they fail to pay rent or violate their lease. It would have also required landlords to give tenants the opportunity to correct any violations before evicting them.

In a statement, the California Rental Housing Association, which has argued that the housing bills would have stymied production, said AB 1481 would have “complicated the already cumbersome eviction process.”

But the bill’s coauthor Asm. Tim Grayson (D-Concord) has said that protections against rent-gouging, like AB 1482, “are not enough when tenants can still be evicted without cause or due process.”

Correction: An earlier version of this story misstated that the cap on rent increases on rent-controlled buildings in the city of Los Angeles is 4 percent. The cap is 3 percent until July 1, 2019, when it will increase to 4 percent.