What is Costa-Hawkins? How will its repeal impact you?
Updated: Jun 10, 2018
What is Costa-Hawkins?
For landlords, and truthfully for the entire economy, Costa-Hawkins is a very good law.
In 1995, the State of California enacted a law that stopped cities from imposing rent control on new construction buildings, called Costa Hawkins.
It is important to note that this is a state law that prevents local government from deciding their own rent control laws.
What happens if Costa-Hawkins is Repealed?
If Costa-Hawkins is repealed in November, local city governments will be able to change the rent control laws to whatever they wish it to be, and for any building built in any year.
With regards to Los Angeles, we all know that this city is heavily pro tenant, and not pro landlord. Therefore, it is smart to assume that rent control laws certainly will be expanded and increased in severity if the City of Los Angeles is allowed to make their own rent control laws.
Is Costa-Hawkins Repeal Going to be on the November Ballot?
Yes! In fact, tenant activists needed to get 365,880 signatures for the bill to be put on the November Ballot. They were able to gather about 600,000 signatures, which is almost double the amount they needed. This further proves how much support there is for Costa-Hawkins being repealed.
What are the Possible Outcomes for Rent Control laws in Los Angeles if Costa-Hawkins is Repealed?
Without a doubt, rent control laws will be, at a bare minimum, expanded and intensified.
If Los Angeles wants to, the city can enact rent control laws on any building built in any year. Therefore, it is very likely that buildings that were built in the 1980s and 1990s (and possibly every single building built in any year), will fall under rent control laws.
If Costa-Hawkins is Repealed, What is the Most Extreme Possibility?
The most extreme, and most damaging, result of a Costa-Hawkins repeal would be if the city of Los Angeles decides to impose vacancy rent control restrictions.
Vacancy rent control restrictions would mean that you cannot rent out a new vacancy at market rents.
In other words, if you had a tenant who was paying $800 for a 2-bedroom unit, and that tenant moved out, you would be forced to re-rent that unit for the same $800 that the previous tenant was paying (plus the 3% increase that rent control allows you).
If the City of Los Angeles went this far, it would be extremely detrimental to property values, and truthfully, it would be a terrible law for the economy as a whole.
I personally believe, and sincerely hope, that the City of Los Angeles would not go so far to enact vacancy rent control restrictions if Costa-Hawkins is repealed.
Rent control laws in California, and Los Angeles, are only going to get stricter.
It is unlikely that the City of Los Angeles would choose to go to the absolute extreme with vacancy rent control restrictions, but they will certainly expand rent control laws to include buildings that are currently non-rent controlled.