In November, Californians will vote on a ballot proposal to repeal the Costa-Hawkins Rental Housing Act, known most commonly as just “Costa-Hawkins.” The statewide law, enacted in 1995, limits rent control to buildings built before February of 1995, and prohibits municipalities from expanding rent control to include “vacancy control.”
Vacancy control means taking away the right of landlords to increase the rents of vacant units to match market price. So repealing Costa-Hawkins would mean eliminating the current regulations on rent control, opening the door for city governments to impose their own rent regulations on newer buildings, and allowing for the possibility of vacancy control. This is a dangerous measure that must be stopped for several reasons; repealing Costa-Hawkins would prove devastating not only to property owners but to California’s economy as a whole.
Much of the debate surrounding Costa-Hawkins is colored by a fundamentally false dichotomy: supporters of the repeal seek to characterize opponents as greedy corporate landlords eager to profit on the further gentrification of California’s cities at the expense of low-income tenants clinging to their housing. As professionals who work with both tenants and landlords every day, we can tell you from experience how unfair and untrue this is.
First of all, many of the tenants we work within rent-controlled units aren’t the ones who need the affordability it provides. But don’t take our anecdotal word for it: a 2015 report from The Economist found that “those living in rent-controlled flats inNew York tend to have higher median incomes than those who rent market-rate apartments,” possibly because “wealthier households may be in a better position to track down and secure rent-stabilized properties.” This sheds light on one of the many problems with the effort to repeal Costa-Hawkins. Despite the proposed ballot initiative being named “The Affordable Housing Act,” a repeal doesn’t offer any new affordable housing. It just opens the door for rent regulation that harms property owners without actually benefitting those in need of cheap housing. Second of all, most of the landlords we work with are nowhere near the image that proponents of this repeal are trying to create. They’re mom-and-pop owners of single rental properties who have mortgages to pay and kids to put through school, and they work hard to maintain their rentals as a vital source of income. A repeal of Costa-Hawkins puts their livelihood on the line without even helping tenants.
Rent control is not a right-versus-left issue, nor is it a greed-versus-compassion one. Providing better and more affordable housing conditions for low-income individuals is an undeniably noble aim, andL.A.’s homeless crisis demands discussion, but economists on both sides of the political spectrum agree that rent control does the opposite of solving these problems.
In a New York Times piece, economist and Nobel laureate, Paul Krugman, called rent control “among the best-understood issues in all of economics, and—among economists, anyway—one of the least controversial,” due to their consensus against it. Putting restrictions on rent leads to a reduced supply of property. If owners can’t increase rents in a vacancy, they have less incentive to improve their property to compete for dependable tenants, let alone build more property. So rent control has the adverse effect of what it’s intended to do; it cuts the supply of housing, and in turn drives up prices. Here again, don’t take our word for it: read the 2017 study from theUniversity of Stanford at http://web.stanford.edu/~diamondr/DMQ.pdf or simply Google “economists on rent control” and read what comes back.
Rent control ultimately drives down inventory and drives up the price of rent for other tenants. What happens is that landlords need to find a way to make enough money, so the tenants surrounding the rent-controlled tenant end up paying his share for him. It’s unfair, and we’ve seen it happen time and again.
Voting against the Affordable Housing Act won’t do away with any current forms of rent control in the state of California; in fact, it won’t change anything. It will just ensure that rent control doesn’t go unchecked. The repeal effort, on the other hand, favors a radical (and radically misguided) overhaul. If we allow Costa-Hawkins to be repealed, thereby allowing politicians to expand rent control in attempts to make it look like they’re solving the issue of affordable housing, we’re actively hurting and de-incentivizing property owners, all while making our cities less affordable in the long term, with worse housing conditions. With vacancy control on the table, landlords’ livelihoods are at risk in a dire way.
We have the knowledge. Now it’s on us to inform people who don’t know the ins and outs of rent control about the harm they’ll actually be doing themselves if they vote to repeal this law. We need to spread the word to stop the so-called Affordable Housing Act and keep Costa-Hawkins in place.
[AOA: We must stop this type of government and tenant control of our property! You have the opportunity to help do just this by defeating the tenants’ free rent “Proposition 10” that will be on the November ballot. Please use the Costa-Hawkins donation form below and join the fight of our lives to save our property!]
What Else Can You Do?
Donate today to help the fight to keep your property rights.
Dennis P. Block, attorney and founder of The Law Firm of Dennis P. Block & Associates, is an authority in the field of Landlord/Tenant law and rent control issues. He can be reached at 1 800 77-EVICT (38428)
David Crown is the C.E.O. of Los Angeles Property Management Group, and has over twenty-five years of experience managing all types of income properties. A hands-on leader who has managed properties in 16 states, Mr. Crown has been asked to serve as an expert witness in property management matters, and currently serves on the Forbes Real Estate Council. He can be reached directly at (818) 646-8151.