REAL ESTATE NEWS

Proposition 33 Aims to Expand Rent Control in California

Ballot measure would repeal statewide rent control restrictions.

Will the third time be the charm for rent control in California?

The battle lines are forming over a ballot measure, designated last week as Proposition 33 and labeled by its supporters as the Justice for Renters Act, that aims to repeal statewide rent control restrictions.

Two other ballot initiatives to lift statewide rent control restrictions were defeated by large margins in 2018 and 2020.

The tenant rights group, Housing is a Human Right and its parent organization, the AIDS Healthcare Foundation, collected more than 800,000 signatures last year to put the issue on the November 2024 ballot.

Proposition 33 consists of 23 words: "The state may not limit the right of any city, county, or city and county to maintain, enact or expand residential rent control."

Proposition 33 would repeal the Costa-Hawkins Rental Housing Act, a three-decade-old state law that prohibits cities from establishing rent control over all single-family homes and housing units built after 1995.

Costa-Hawkins also preempts local laws from allowing vacancy decontrol of rent controlled units, which would permit landlords to raise rents following voluntary departure by the prior tenants or following cause evictions.

Two weeks ago, proponents of Proposition 33 issued a release that touted endorsements from the California Democratic Party, UNITE HERE Local 11, the American Federation of Teachers Local 1521 and the California Alliance for Retired Americans, among others.

CRE groups are lining up against Proposition 33. Last month, the Southern California Rental Housing Association posted a statement warning property owners that Prop 33 will strip them of their property rights.

"If [Proposition 33 is passed], vacancy decontrol (your right to charge market rate rent upon vacancy) may be lost. Exemptions for new construction, single-family homes and condominiums may be lost and these exempt properties may then fall under restrictive, local rent control," the association said.

The Rental Housing Association also warned that passage of Proposition 33 will "decimate" property values, citing rent control reform that was enacted by New York State in 2019 as an example. "Similar laws passed in New York State caused values of rental properties to drop 30% to 40% immediately," the group declared.

Last month, the Los Angeles County Board of Supervisors advanced a proposal to cap rent increases for rent-stabilized units in unincorporated parts of the county.

The supervisors by a 3-2 margin approved a resolution to prohibit landlords of rent-stabilized apartments in unincorporated L.A. County from raising rent by more than 3% a year. The resolution also caps annual rent increases for small property owners at 4% and sets the bar at 5% for owners of luxury units, the Los Angeles Times reported.

According to a recent study commissioned by the county, a total of about 51,700 rent-controlled units that would be impacted by the proposed caps. All of these units were built before 1995 and most are located in East L.A., South L.A. and the San Gabriel Valley.


Source: GlobeSt/ALM