Costa-Hawkins Rental Housing Act- A Short History

This week I'm in Sacramento at the California Association of Realtors conference celebrating the 30 year anniversary of the Costa-Hawkins Rental Housing Act. This law passed in 1995 and has been protecting California property owners and future renters against extreme and damaging local rent control ordinances. It was authored by Senator Jim Costa and Assemblymember Phil Hawkins. Senator Costa spoke to us yesterday about the 10 year effort to get this law passed and the continuing efforts to keep this law in place.

Prior to Costa-Hawkins, cities like Santa Monica, Berkeley, and San Francisco were restricted by vacancy control which permanently capped rents even after a tenant moved out. In other words, landlords were forced to indefinitely rent their properties below market value. Many owners faced mounting expenses and were often forced to sell their properties, often at a loss, as rental properties were no longer seen as a viable investment. Luckily....a solution was found!

Here are a few provisions that continue to protect property owners through the Costa-Hawkins Act:

• Vacancy Decontrol/Recontrol: Property owners can reset rents to market rates once a tenant voluntarily moves out of a unit
  

• New Construction Exemption: Any residential apartment unit built after February 1, 1195 are exempt from rent control ordinances. This provision helps ensure that investment in new housing construction is not discouraged
  

• Protection for Single-Family Homes and Condos: Individually owned units were exempt from local rent control ordinances, recognizing that small landlords are not corporations.

Over time, there have been continued efforts to repeal this act but these efforts, including Proposition 33 (2024) have been rejected by California voters.

As a reminder, the law does not prohibit rent control but it does prevent overreach. It is anticipated that there will be continued attempts to change or repeal Costa-Hawkins so the California Association of Realtors will continue to be vigilant.

Source: C.A.R.