What exactly is Costa-Hawkins?

What is the Costa-Hawkins Rental Housing Act?

The Costa-Hawkins Rental Housing Act is a California law passed in 1995, preventing rent control requirements from affecting properties built after that year. This law has been supported by property owners and landlords because it allows them to rent their properties at the market rate. The city of Los Angeles also passed a law similar to this called the Rent Stabilization Ordinance (RSO), which states that housing in Los Angeles built only before 1978 can be subject to rent control. This gives landlords and property owners even more flexibility with their rental rates, allowing them to earn more income, and be more flexible with their spending. However, many tenants and others, including LA mayor Garcetti are currently pushing to repeal this, and have gathered more than 565,000 signatures to include the repeal on the California ballot in November (1).

Why Do People in Los Angeles Want to Repeal Costa-Hawkins?

L.A. citizens would like to repeal Costa-Hawkins because federal and state laws already allow landlords to receive fair rent. They also state that the repeal of Costa-Hawkins would allow cities in California to expand their rent control. Furthermore, they believe that there are not enough laws to protect the tenants, especially since Los Angeles is currently going through a housing crisis because of the lack of affordability in housing.

Need to know more on the Housing Crisis?

In Los Angeles, there has been a county-wide, 32% increase in rent since 2000, while the household incomes have dropped 3% since that year. Due to these trends, the poverty rate of the county has increased from 18% to 25%. A recent report came out stating the city would need to supply 551,807 new affordable units of housing in order to house all of the county’s lowest income-earners– people who make half of this LA county median income: $64,000. The report recommends incentives to have developers build more affordable units in Los Angeles. It also adds a linkage fee to other developers when they build in the city. This proposed fee goes towards affordable housing.

Is Anyone Against the Repeal of this Law?

Many people in California, especially landlords and real estate property owners, are strongly against this bill to repeal Costa-Hawkins. This is because they believe it will deter developers in Los Angeles from constructing new buildings. This would decrease the amount of housing in Los Angeles, worsening the affordability housing crisis that is already happening. Many also believe that property owners can profit more on their housing investments when the rents are high.

So, What is Happening Now?

Renter/tenant groups claim they have enough signatures to put this repeal of the Costa-Hawkins Rental Act on the November ballot. The Mayor of Los Angeles, Eric Garcetti, supports the tenant groups. Garcetti told  voters to give the city and its representatives back their power when speaking about the increases in rent. The AIDS Healthcare Foundation has gathered more than enough signatures for the repeal to be on the ballot.

How Will This Affect Me If It Passes?

Repealing Costa-Hawkins expands rent control to city properties that built after 1995 (1978 for Los Angeles). Housing-wise, this would restrain and potentially reduce the market value on rentals. This potentially solves the current housing crisis in Los Angeles. Therefore, for those who are low-income, it could potentially increase housing options in the cities that expand their rent control. Costa-Hawkins does not affect cities already under rent control.

If you are a landlord and this bill is repealed, the city you reside in may impose rental control on your property. This could decrease your profit, or attract more prospective tenants to your building.

Sources:

  1. https://la.curbed.com/2018/4/23/17270880/costa-hawkins-repeal-california-rent-control-garcetti
  2. https://la.curbed.com/2017/5/23/15681418/la-county-affordable-housing-shortage-crisis-rental-prices