• September 30, 2022

Should California expand its rent control laws?

Proposition 10, called the Affordable Housing Act, is an initiative on the November 2018 ballot to repeal the state’s Costa-Hawkins Rental Housing Act.

The Costa-Hawkins Rental Housing Act (“Costa-Hawkins”) is a California State law, enacted in 1995, that places limits on municipal rent control ordinances. Costa Hawkins affects rentals in two main ways. First, it prohibits cities from establishing rent control on certain types of residential units, for example, single-family homes, condominiums, and newly constructed apartment units that are considered exempt. Second, it prohibits municipal “vacancy control,” also called “strict” rent control.

If an apartment is under “vacancy control,” the ordinance serves to deny or limit the landlord’s ability to raise their rent to a new tenant. It works this way even in cases where the previous tenant voluntarily vacated the apartment or was evicted for cause (such as nonpayment of rent). In other words, Costa-Hawkins, by now prohibiting “vacancy control” in the above circumstances, mandates that cities allow the owner of an apartment the right to rent it when it is vacant at any price (i.e., generally the price of market).

Rent control in California is largely the creation of its municipalities. This ability of city governments is limited by the federal and state constitutions, as well as federal and state laws. Costa-Hawkins is a key state statute enacted to manage the power of California cities to regulate their rental markets. The original rent control efforts sought to provide the public with affordable housing, but caused a drop in the number of new units being built, exacerbating the housing shortage. Later rent control laws exempted new construction. Said regulation also eliminated the incentives to improve or even maintain older housing units.

Repealing Costa-Hawkins would mean eliminating current rent control regulations, opening the door for city governments to impose their own rent regulations on newer buildings and allowing the possibility of vacancy control.

There are opposing sides to repeal.

“Getting Democratic Party support is huge” to repeal the Costa-Hawkins Housing Act, said Joe Trippi of Trippi, Norton, Rossmeissl Campaigns, the chief strategist for the Yes on 10 campaign. “The party’s support helps make it clear that he supports the millions of Californians struggling to pay rent and supports returning the power to respond to the state’s housing affordability crisis back to the people and local communities.” The repeal is believed to allow communities to create strong protections for tenants against displacement, rent increases and evictions without interference from state law.

David Crown, CEO and founder of LA Property Management Group, refutes the idea that repeal will lead to affordable housing. According to David, much of the debate surrounding Costa-Hawkins is colored by a fundamentally false dichotomy: supporters of repeal seek to characterize opponents as greedy corporate owners eager to profit from the further gentrification of California cities at the expense of low income tenants. clinging to your home. “As a property manager who works with both tenants and landlords every day, I can tell you from experience how unfair and untrue this is.”

Even though the proposed ballot initiative is called the “Affordable Housing Act,” a repeal does not offer any new affordable housing. It simply opens the door to rent regulation that harms landlords without benefiting those who need more affordable housing, according to Crown.

This author believes that the repeal limits the number of potential investors purchasing these units because renters have more rights than homeowners. Also, similar to 1995, additional rent controls may limit new housing development.

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