Rent Control will once again be on the November 2024 ballot. This time it comes in the form of The “Justice For Renters Act“ – a proposed measure in California aimed at repealing Costa-Hawkins. If passed, it would allow local governments to impose rent control on single-family homes and newer apartments, and also eliminate the state’s ban on vacancy control, allowing cities and counties to regulate rents between tenancies.
Overview of the Justice for Renters Act
- Coming to CA ballots in 2024: The California Secretary of State has verified 617,000 signatures supporting the Justice for Renters Act and it has now qualified for the November 2024, general election ballot in California.
- The Man Behind It All: This measure is being spearheaded by Michael Weinstein, head of the AIDS Healthcare Foundation, who was also the driving force behind other recent rent control measures such as Prop 10 (in 2018) and Prop 21 (in 2020). It is Weinstein’s belief that rent control should apply universally across California’s housing stock, without exemptions, and that rent caps should be determined at the local level.
- Aiming to Upend Costa Hawkins: This measure seeks to repeal the Costa-Hawkins Rental Housing Act of 1995, which would allow local governments to impose strict rent control on newer apartments and single-family homes.
- Vacancy Decontrol at Risk: The JFR Act would also eliminate the state’s ban on vacancy control, giving local authorities the power to regulate rents between tenancies. Currently, vacancies are decontrolled – ie vacant units may be leased at market rent upon re-rental.
- Expansion of Rent Control: Additionally, the act would prevent the state from limiting the right of local governments to implement or expand residential rent control. Despite California’s passage of a statewide rent control law (AB 1482) in 2019, which capped rent increases for most of the state’s multifamily housing stock at 5% plus the consumer price index (or a maximum of 10%), there are continued efforts to undermine or eliminate the Costa-Hawkins Act.
Potential Impact and Opposition
- The Act Would Dis-incentivize Improvements: The implementation of vacancy control in particular on a State and/or Local level would discourage landlords from keeping units on the market or investing in property improvements due to limited rent and revenue potential – ie Why renovate a unit if you cannot achieve market rent?
- Continued Development Slowdown: Many real estate investors, both large and small, are already soured on California’s housing policies and believe it to be un-investable. Recent regulations such as Measure ULA have already negatively impacted new construction development, in addition to transactions $5M+. Opponents of the Justice for Renters Act argue that the measure also could significantly slow down the construction of affordable housing, further exacerbating the state’s homelessness and affordability crisis.
- Wait and See: Previous attempts to repeal Costa-Hawkins were rejected by voters by more than 20 points, indicating substantial resistance to extreme rent control measures. However, as mentioned above, Measures such as The Mansion Tax have managed to pass indicating that voters are not adverse to imposing increased regulation on the real estate industry.