Local Rent Control Initiative
What is it?
This repeals the Costa-Hawkins Rental Housing Act, passed in 1995, which banned
cities from enacting new rent control laws on housing first occupied after Feb
Recently, David Chiu passed AB 1482, a statewide “just cause eviction” law that
effectively enacts rent control of CPI + 5% (technically, it applies relocation
assistance penalties to landlords who raise their rents by more than CPI +5%
and cause their tenants to move).
AB1482 applies to:
- LLCs with at least one corporate member
And does not apply to individual owners, even if they own several homes.
Prop 21 will allow new rent control on all housing first occupied more than 15
years ago (as a rolling window).
Prop 21 will apply to all homes except those owned by:
- Natural persons who own 1 or 2 properties
- Revocable trusts (or other look-through entities) containing people who own 1
or 2 properties
In addition to allowing rent control, Prop 21 also allows vacancy control.
Currently, California ties rent control to a particular residency, so that when
a tenant moves out the rent on the unit may reset to the market rate. Vacancy
control would ban this practice, allowing an increase of just 15% when a tenant
Why is it on the ballot?
The AIDS Healthcare Foundation collected signatures to put this on the ballot.
It could have been done by the legislature.
Why should you vote no?
There are a number of reasons to oppose Prop 21, and several of them have
nothing to do with the merits of rent control or vacancy control.
First, because Prop 21 is a ballot initiative, it can only be changed by the
legislature with a 2/3 vote of both houses. And even then, those changes must
“further the purposes” of the initiative. Any changes which seek to restrict or
eliminate the powers that Prop 21 grants to cities must go to a full statewide
vote. This means that if a city enacts such onerous laws that they kill all
development, the only remedy is a statewide ballot prop campaign.
Second, we shouldn’t throw out all the hard work that David Chiu put into
AB1482, which effectively established reasonable state-wide rent control of
“CPI + 5%” – that is, Consumer Price Index inflation plus 5%. Assemblymember
Chiu worked with tenant advocates, labor unions, and property developers to
find a compromise that furthered the goals of housing stability while not
disincentivizing construction and investment. Prop 21 will override AB1482’s
carefully crafted provisions and let cities enact wildly different rules from
their neighbors. This increase in legal complexity will make developing new
housing even harder.
Beyond the procedural reasons to vote No on Prop 21, you should also vote No
on the merits.
Vacancy control has failed everywhere it has been tried. In Stockholm it led to
a waiting list of over 500,000 people
that can take 30 years to move through. In Mumbai it led to a thriving black
market and bribes to get an apartment,
horribly deteriorating rental housing stock,
all while pushing new development into ownership units rather than rentals,
further limiting the options of those not wealthy enough to own. There is no
reason to think the outcome will be any different in California.
Renters deserve stability, and they deserve high quality homes. While Prop 21
may increase stability for existing renters, it will make rental housing both
harder to find and lower quality. It may even incentivize bribery by wealthier
people in order to convince a landlord to rent to them.
We supported David Chiu’s AB1482 bill, as we would support anything that made
the necessary compromises to grow the housing stock. Expanded rent control
must be coupled with development incentives, otherwise we are merely treating
a symptom while making the disease worse. Fundamentally, rents are high becase
we have a shortage of 3.5 million homes,
and rents will not go down until we start addressing the reasons for the
shortage: overly restrictive development laws and local governments captured by
Rent control isn’t actually the reason that rents are high, despite what many
people think. Rent control is an OK band-aid for a dysfunctional market, but
vacancy control will lead to much more dysfunction. Rent control passed in
the legislation as part of a compromise package that includes housing
production/streamlining would be a positive thing, but not as a standalone
Prop 21 undermines #GoodGovernment.Promotion
from our voting framework, because of its high threshold to modify and forcing
future decisions to the ballot.
Why should you vote yes?
Though a majority of us are against Prop 21, the vote was not unanimous. Here
is the dissenting opinion:
Prop 21 would help renters currently in non-protected residences achieve
stability. Yes to Prop 21 means supporting harm-reduction measures until we get
to housing abundance. Prop 21 expands the applicability of rent control to more
classes of housing by closing loopholes that corporate landlords were able to
exploit, but still exempting true “mom-and-pop” landlords. It would be the first
major change to Costa-Hawkins, and enact a 15-year rolling exemption to rent
control for new properties, rather than setting a start date in stone
(currently, all properties built after 1995 are exempt).
Rent control is not necessarily in opposition to fixing the supply-side
problems of our housing shortage. What disincentivizes production of new housing
is not our rent control laws, but rather that we make new housing illegal
through zoning ordinances. The fight to remedy California’s decades-long housing
shortfall will take time to achieve victory.
Price controls and scarcity are in fact a disaster, but those fighting for
renters rights want some level of regulation with an absence of scarcity. Price
controls can be dangerous, but sometimes worth the trade-off if the advantage is
positive enough - namely keeping people stabily housed. Rent control is a tool
we can use to prevent displacement as we work to bring down prices by increasing
The claim that Prop 21 would kill all development is overstated, it simply
allows cities to enact rent control. Prop 21 sets reasonable limits, such as
exempting new development. Assuming that all cities immediately implemented
local rent control and all Prop 21 eligible rental supply were maxed out, it is
unlikely that all development would cease. At some point, demand would drive
Vacancy control is not uniquely dangerous, nor would exacerbate the dysfunction
of the current housing market. Arguments against vacancy control are that it
diminishes the quality of existing rental stock because landlords aren’t
incentivized to maintain and favors a select few tenants who benefit. Currently
in vacancy decontrol, we still have these issues. In the present day, landlords
raise rental rates to market even without improving the quality of the good or
making it competitive with new development. Because there’s so little new
development anyways, the supply competition and incentive argument is not as
As for the argument that vacancy control leads to the formation of a “black
market” of rental stock or bribery from wealthy tenants, these incentives arise
because housing is not a self-regulating market. Housing is a market
administered by public agencies and elected officials. They have a
responsibility not to simply impose regulations and walk away, but instead work
to make sure the market functions more optimally. It doubles the resolve that
we must demonstrate to build the necessary housing, and keep scarcity to a
minimum to prevent black markets from arising.