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Home » Blog » Repealing the Rent Control Act Could Make an Already Suffering Affordable Housing Market, Catastrophic

Repealing the Rent Control Act Could Make an Already Suffering Affordable Housing Market, Catastrophic

In November, California residents will vote on Prop 10, a ballot proposal to repeal the Costa-Hawkins Rental Housing Act.

Proposition 10 is an initiated state statute that would repeal the Costa-Hawkins Rental Housing Act(Costa-Hawkins), allowing local governments to adopt rent control ordinances.

As it stands, there is data proving that many renters living in rent-controlled units, have a higher median income than those who rent at fair market value (2015 Economist) as David Crown pointed out in this article on Prop 10 in Forbes. 

This means that landlords will be limited their profits, losing money. In fact, it could make a big problem, the availability of affordable housing, a lot worse than it currently is.

Ballotpedia describes in depth California’s gubernatorial candidates and their strategies behind the housing crisis and Prop 10:

“Candidates in the 2018 gubernatorial election have proposed plans to increase housing in California. Gavin Newsom (D) called for “a Marshall Plan for affordable housing,” while John Cox (R) said that some development regulations need to be eliminated to incentivize construction and decrease costs.[6] Neither Newsom nor Cox, however, support a full repeal of Costa-Hawkins. Newsom said he was open to fewer restrictions on rent control, but that outright repeal would “have unintended consequences on housing production that could be profoundly problematic.” Cox stated, “I don’t believe rent control works.”[7] The California Democratic Party’s executive committee endorsed Proposition 10, while the California Republican Party’s leadership decided to oppose the ballot initiative. Amy Schur, campaign director for the Alliance for Community Empowerment (ACCE), responded to opponents who said that decreasing rents requires more housing, not rent control. She said, “That [building] is slow and expensive. In the meantime, the only policy step that will address the severe displacement crisis in the short term is the expansion of reasonable rent control.”[8]

The state legislature had also looked at rent control in 2018. Rep. Richard Bloom (D-50) introduced a bill to repeal Costa-Hawkins. The Assembly Housing and Community Development Committee rejected the bill because the committee’s two Republicans voted against passage and two Democrats abstained from voting. Three Democrats voted to recommend the bill, but four votes were required.[9]Rep. David Chiu (D-17), the committee’s chairman, said, “… this will not be the end of the conversation. It’s just the beginning.”[10]”

In my opinion, the answer is to build more place for people to live. We need to see a raise in the level of inventory to bring down prices which will provide more affordable housing. With the expansion of vacation rental platforms we saw a drastic reduction in long term rentals creating a shortage in affordable housing. Now that regulations are starting to be put in place we could see more supply and less demand which leads to lower prices for the rental.
Below is a list of current areas where rent control is already in place. If changed, this will be state-wide.
Ballotpedia also mentions as of 2018, four states, including California, and D.C. allowed some form of rent control on specific properties. In 11 states, no cities have rent control but rent control was not preempted. In 24 states, the state legislature preempted all forms of local rent control ordinances. The following map illustrates the distribution of rent control policies in the U.S.:[38]