In a matter of months, voters across California will decide the fate of the Costa-Hawkins Rental Housing Act, a little-known-but-crucial safeguard against extreme forms of rent control in the Golden State.

Costa-Hawkins, enacted in 1995, exempts specific properties from rent control, like single-family homes and construction completed after February 1995. In cities with pre-existing rent control when Costa-Hawkins was enacted, it grandfathers in earlier exemptions for new construction. Additionally, it safeguards vacancy decontrol, allowing landlords to adjust rents to market rates after a tenant vacates.

The adoption of Costa-Hawkins followed a time of radical rent control measures in several California cities, such as Santa Monica and Berkeley in the 1980s. These policies had led to a noticeable reduction in the availability and quality of rental housing and discouraged new housing investment. Costa-Hawkins, named after its authors, Jim Costa and Phil Hawkins, then members of the state Legislature, plays a crucial role in maintaining a balance in the housing market, preventing the stagnation and deterioration often seen in environments with extreme types of rent control.

For rental property owners, the implications are severe. The potential for strict rent control across all housing types would deter investment in new housing construction, exacerbating California’s already dire housing shortage. This concern is heightened by the fact that about 25 local governments in California have adopted rent control ordinances, several over the past decade, and more potential targets for local rent control in the pipeline. Without Costa-Hawkins, tenant activists would be further motivated to bring more stringent rent control to more jurisdictions.
With unbridled rent control, landlords would see a decrease in their properties’ values and, as a result, a reduction in the quality and availability of rental housing. This situation could drive many landlords out of the market, leading them to convert properties for other uses or sell them outright, ultimately diminishing the rental housing stock.

Furthermore, the “Justice for Renters Act” does not address the core issues of the housing crisis. It fails to increase funding for affordable housing, compel local governments to build more affordable housing, or provide immediate relief to those facing homelessness. Thus, it is a misguided solution that does not address the root problems and could make the housing situation in California worse.

In response to this threat, the California Apartment Association has reactivated Californians for Responsible Housing, which aims to educate voters about the negative consequences of repealing Costa-Hawkins and to protect the interests of rental property owners. CAA’s campaign against extreme rent control measures has a history of success, with voters rejecting similar initiatives in recent years, namely Propositions 10 and 21.

The rigidity of the “Justice for Renters Act” is particularly concerning. If passed, it can only be amended through another statewide initiative, cementing any damaging policies into California’s legislative landscape for years to come. This inflexibility poses a significant risk to the dynamic and equitable management of the state’s rental housing market.

California’s housing future stands at a crossroads, with the “Justice for Renters Act” representing a destabilizing force. It’s crucial for rental property owners, industry stakeholders, and voters to understand the far-reaching implications of this Act. Maintaining the Costa-Hawkins Rental Housing Act is not just about preserving the interests of property owners; it’s about ensuring a balanced, functional, and fair housing market in California. As this significant ballot measure approaches, the need for informed, engaged participation in the housing debate has never been more urgent.