Special Report

Beyond the Global Health Crisis: California Proposition 21

Third Quarter 2020

Repeal of Costa-Hawkins on California Ballot: Proposition 21 Has Potential to Reshape Multifamily Housing

Initiative could tighten existing restrictions. Under Proposition 21, vacancy control will be introduced in areas with rent control as Costa-Hawkins is repealed. Currently, operators are able to lift rents up to the market rate upon vacancy. The initiative will now limit the rise in rents to 15 percent during the first three years of a new tenancy in addition to increases allowed by local ordinances. The restrictions will apply to properties that were first occupied more than 15 years ago and continue on a rolling basis. Units that were exempt from local rent control laws due to Costa-Hawkins will no longer enjoy those exceptions and permanent rent caps can be installed. Last year, statewide rent control was enacted with Assembly Bill 1482 which caps annual rent gains in areas without rent control at 5 percent.
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