Question: Does California have statewide rent control laws?
Answer: At present, there are no statewide rent control laws. However, the Tenant Protection Act (TPA) of 2019 comes close, and Proposition 21, a rent control measure, will appear on California’s ballot in November 2020.
Rent control is one solution to keep rents from rising beyond the financial means of long-term tenants.
The Costa-Hawkins Rental Housing Act severely restricts local rent control laws in California, prohibiting rent control for housing units:
- first occupied on or after February 1, 1995; and
- with single titles, like:
- single family residences;
- condo units; and
- some townhomes.
Thus, Costa-Hawkins permits local governments to enact rent control measures on a limited number of older multi-family units. However, multiple efforts have been made in recent years to amend Costa-Hawkins and allow local governments to enact rent control on an expanded number of units.
In 2019, the TPA was passed to cap annual rent increases at 5% plus the rate of inflation for much of California’s multi-unit residential properties. Further, it requires just cause to evict tenants in place for 12 months or more. [Calif. Civil Code §1946.2]
However, many units are exempt, and the law is only effective through January 1, 2030.
In November 2020, voters will weigh in on Proposition 21, the Local Rent Control Initiative. If passed, Prop 21 will institute an active date that moves with the calendar. Prop 21 allows local governments to enact local rent control measures on units:
- first occupied within 15 years prior to the date the landlord seeks to establish the initial or subsequent rent rate; and
- owned by natural persons who own no more than two separate-title housing units, such as:
- SFRs;
- condos; and
- some townhomes.
Rent control drawbacks
Rent control attempts to address a real issue: the dire lack of housing accessible to low- and moderate-income renters. But, much like the TPA, rent control is a short-term solution with plenty of drawbacks.
Rent control gives landlords no reason to improve or even maintain their properties beyond maintaining habitable living conditions. This leads to decaying rent-controlled units, which, on top of making life hard for tenants, blight neighborhoods and harm surrounding property values.
Further, rent control decreases rental mobility and rental inventory, according to a 2019 Stanford study.
The better alternative than rent control is more rental housing.
The rent control issue is in response to the severe imbalance between low-tier rental inventory and demand from low-income renter households. A more organic way to address this problem is for local governments to encourage, reward and demand more low-tier rental housing.
But new units or zoning changes are often met with vocal not-in-my-backyard (NIMBY) advocates who seek to preserve their neighborhood’s “character” by restricting building height and density. NIMBYs tend to be the most vocal — and sometimes the only — voices at city council meetings.
As a real estate professional, you also have an equal stake in zoning regulations and development in your local community. You can help by getting involved and making sure NIMBYs’ concerns are balanced by the real need to increase housing and decrease the strained reliance on outdated rent control measures by:
- attending council meetings;
- discussing the need for zoning changes with other professionals in the industry; and
- showing support for progressive zoning reform.
When adequate housing is available at all income levels, a more stable housing market will be born, and more qualified homebuyers will emerge.
Related article:
Change the law: Eliminate rent control in favor of more low-income housing
Bravo! You got this conclusion correct – not rent control but allow more units to be built. Let the free market solve the problem.