The Question

Should the Costa-Hawkins Rental Housing Act of 1995 (a state law) be repealed so local governments can regulate rents?

The Situation 

Housing in California is expensive. Renters here typically pay about 50% more for housing than in other states, and in some areas, rents are more than double the national average. This is because there isn’t enough housing for everyone who wants to live in California, so renters have to compete, which drives up the prices.

To help with this, some cities in California have rent control laws that limit how much landlords can increase rent each year. About one-quarter of Californians live in areas with rent control, like Los Angeles, San Francisco, and San Jose.

Additionally, a state law limits most landlords from raising rent by more than 5% plus inflation (up to 10%) each year, and this law is in effect until 2030. However, another state law, called the Costa-Hawkins Rental Housing Act, restricts local rent control in three ways: it doesn’t allow rent control on single-family homes, on any housing built after February 1, 1995, and it doesn’t let local laws control the rent a landlord can charge a new tenant. Rent control can only limit rent increases for existing tenants.

The Proposal

Prop 33 says the state government cannot limit local governments’ power to expand or limit rent control. In essence, it would repeal the Costa Hawkins Rental Act. It would allow cities and counties to regulate rents for any type of housing property they choose. It would not matter when the property was built or what type of building it is. Prop 33 would not change existing rent control laws or create new rent control laws. It would not change a landlord’s right to a fair rate of return on their investment.

Fiscal Effects

The impact on renters and landlords would depend on how many properties are covered by rent control and how much rent increases are limited. Local governments and voters would decide these factors. On the one hand, expanded rent control would provide some people with more affordable housing. On the other hand, housing scarcity could occur if landlords sell their properties rather than rent them out. And the value of rental properties could decrease because potential buyers might not want to pay as much for these properties.

The impact on local budgets would depend on how many cities and counties pass rent control laws and what landlords do. The measure would likely reduce the amount of money cities, counties, special districts, and schools receive from property taxes. This decrease could be in the tens of millions of dollars each year. Cities or counties will also need to spend money to enforce rent control laws. These costs will likely be paid by landlords.

Supporters Say

• Prop 33 lets local governments enact rent control to protect renters and allow renters to stay in their homes and apartments while more affordable housing is built.
• Prop 33 allows local governments to decide whether and how much to control rents based on the unique situations in their communities
• Billionaire corporate landlords are currently calling the shots and profit from the lack of housing supply.

Opponents Say

• Prop 33 could increase housing costs and block new affordable housing from being built. This could worsen the housing crisis.
• Prop 33 could eliminate homeowner and renter protections that already exist and could lead to overturning other state affordable housing laws.
• Prop 33 could reduce home values.

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