California’s Proposition 33 Sparks Debate on Rent Control’s Future

In November, California voters will once again face a pivotal decision regarding rent control, as Proposition 33 seeks to grant cities and counties greater authority to regulate rents. This is the third time in six years that a significant vote on rent control has occurred in the state.

The existing Costa-Hawkins Rental Housing Act, enacted in 1995, currently restricts rent control on single-family homes, condominiums, and apartment buildings constructed after its passage. Moreover, it permits landlords to raise rents to market rates between tenants. Proposition 33 aims to dismantle these provisions, allowing local governments to implement rules governing rents on various properties, including new tenancies. It would also prevent the state from enacting new laws that restrict local rent control measures.

Despite prior attempts to rescind Costa-Hawkins failing, support for rent control has been gaining traction amidst rising housing costs and has become a topic of national interest. A 2018 poll by the Public Policy Institute of California (PPIC) reflected shifting attitudes, although voters rejected a related proposition that same year.

Recent polling data indicates that Proposition 33 has a mix of support and opposition, with a September survey showing a near-tie: 37% of respondents supported the measure, while 33% opposed it, and the rest remained undecided. Younger voters tend to favor the initiative, whereas older voters are less supportive.

According to economists, rent control remains a contentious issue, exhibiting a complex interplay of benefits and drawbacks. Historical research suggests that while rent control can stabilize neighborhoods by reducing displacement, it may also discourage landlords from maintaining properties and disincentivize new rental construction.

California’s existing statewide rent control law, the Tenant Protection Act of 2019, caps annual rent increases at 5% plus inflation or 10%, whichever is lower. However, it exempts new constructions within the last 15 years and certain property types like single-family homes.

Some economists argue that more nuanced rent control policies could address these challenges by balancing the needs of tenants and landlords. For instance, provisions could allow landlords to pass on improvement costs to tenants under certain conditions to ensure building upkeep.

Proposition 33 faces particular scrutiny over its vacancy control provision, which would limit rent hikes even when a new tenant moves in. Critics, including property owners like Gustavo Gonzalez from San Jose, argue that such measures could lead landlords to exit the rental market, eroding the housing stock.

However, advocates like Oakland renter Annmarie Bustamante argue stronger rent control laws are necessary to protect tenants from being pushed out and to create fairer housing opportunities. Experts like Michael Manville from UCLA note the challenges posed by rent control but also emphasize the importance of broader housing supply solutions to address affordability issues.

In essence, while the Proposition 33 ballot measure underscores ongoing debates about rent control’s efficacy, its potential impact on California’s housing market remains a subject of intense discussion among voters, economists, and policymakers.