Rent control and California’s Costa Hawkins law

As rents in Santa Clara County continue to surge, some tenants are facing harsh economic realities. With the median rent for a two-bedroom apartment in San Jose hovering at $2,550–nearly $1,000 more than the national average–lower- and middle-class residents are feeling the squeeze of Silicon Valley’s housing demands.

Northern California is not alone in this–cities all over the state are experiencing skyrocketing rents, and some are advocating for a reformation on consumer protections. Specifically, California’s Costa Hawkins law, which restricts how some cities can implement rent control policies, has come under fire with calls for repeal. But what is it about this law that has landed it square in the middle of the public debate on housing?

A Costa Hawkins explainer

California lawmakers passed the Costa Hawkins Rental Housing Act in 1995. The law, which applies to 15 cities around the state, was enacted to relieve landlords from rent control restrictions in increasingly desirable areas. Costa Hawkins accomplishes this by doing the following:

  • Preventing the affected cities from imposing rent control on any units built after February of 1995.
  • Giving landlords the right to raise a rent to current market value after a tenant vacates.

The second point was a major shift for some cities, as previous “vacancy control” laws could keep landlords from ever raising the rent in certain cases.

A lasting impact

For California cities with a shortage of affordable housing, some say Costa Hawkins’ limitations can have a significant effect. With new housing needed in certain areas, it’s suggested that an exemption from any rent control laws could make rents too expensive from the jump. Conversely, opponents of the law’s repeal claim that strict regulations could deter developers from building much-needed housing.

Regardless, a repeal of Costa Hawkins would likely not have an overnight impact. The ball would still be in the cities’ courts to implement any sort of change. While some would maybe choose to call for stricter rent control, others may maintain the status quo. Not to mention, any changes would still need to go through the often lengthy legislative process.

The future of the law

So far, efforts to repeal Costa Hawkins have failed in Sacramento. Tenants’ rights advocates, however, continue push for the inclusion of a repeal on upcoming ballots. The debate on Costa Hawkins will be interesting to monitor–with no easy fix to the state’s housing issues on the horizon, the future of the law seems murky to say the least.

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