Rent Control In California: What You Need To Know About Proposition 33
California is one of the costliest states in the U.S. to live in, and its housing crisis extends back well before the pandemic. In an effort to curb the rising costs, activists have attempted to expand rent control via a ballot measure.
So far, they have been unsuccessful, but the AIDS Healthcare Foundation is trying again this year, asking California voters to approve Proposition 33 in the Nov. 5 election.
What Is Proposition 33?
The proposition, if approved, would eliminate the Costa-Hawkins Act, which is a 1995 law defining which apartments and rental homes can have limits placed on annual rent increases, or what is commonly referred to as rent control.
Costa-Hawkins allows a landlord of a rent-controlled unit to reset the rent in a unit where the tenant has moved out. It has exemptions for single-family homes, condos and homes built after February 1995, or earlier in some cities. In Los Angeles, for example, the determining date is Oct. 1, 1978, and an apartment built before that is subject to rent control.
If Costa-Hawkins is eliminated, local governments would have the ability to make their own decisions about rent control instead of having to follow a state law.
Proposition 33 would also render the state unable to limit rent control policies on a local level in the future.
What Would It Mean To Give This Power Back To Local Governments?
If approved by voters, Proposition 33 would mean localities could set their own rules about rent control. It would also open the door to expanding controls to include more types of rental housing or newer units if those regulations could get the necessary approvals in their jurisdictions.
It should be noted that those cities and municipalities would have to take additional actions to make changes to rent control laws in their areas. Proposition 33 doesn't make changes to local laws on its own. Instead, it clears a path for those changes to be made.
The State Already Has A Limit On How Much Rents Can Increase Each Year, Doesn't It?
Yes. A state law passed in 2019, Assembly Bill 1482, limits the amount by which a tenant’s rent can increase annually to no more than 5% plus inflation, up to a total of 10%. The law applies to most but not all rentals. Single-family homes, condos and buildings built in the last 15 years are exempt. However, the impacts vary depending on whether a city already has rent control policies in place. AB 1482 is slated to sunset in 2030.
Wasn’t There Already A Rent Control Proposition On The Ballot?
Yes. Similar ballot measures were put forth in 2018 and 2020. In 2020, 59.8% of voters said no to the effort.
The dominant funder of all three of these measures is the AIDS Healthcare Foundation. The organization got involved on the grounds that working toward housing affordability is a critical component of helping it serve low-income people with AIDS, the Los Angeles Times previously reported.
Who Are The Top Funders Backing This?
As of Thursday, supporters of Proposition 33 have raised more than $39.6M, according to the LA Times. About $39M of that came from the AIDS Healthcare Foundation. Other main funders include a political entity called Kevin De Leon for Lieutenant Governor 2026 and the hotel workers union Unite Here Local 11.
Who’s Funding The Opposition?
Commercial real estate and real estate associations are the biggest funders for the opposition to the proposition, data from the LA Times shows. The California Apartment Association’s issue committee has contributed roughly $43.5M to stop Proposition 33’s passage, while the California Association of Realtors and the National Association of Realtors have raised $19M and $5M, respectively.
How Would Proposition 33 Affect CRE?
The California Apartment Association and the No on Prop 33 coalition issued a flyer listing possible outcomes, including an expansion of rent control to cities that don't already have it and a slump in property values as properties that have rent constraints become less desirable.
