Rent control seemed for a while to have been mentioned less in discussions about affordable housing around the country, even as the policy remained in major cities like New York, San Francisco and Los Angeles. Some states, both liberal and conservative, outlawed the practice outright.
But in the past few years, calls for rent control have reemerged in some quarters alongside escalating rents. Some cities have implemented a version of it, including Portland, Maine, in 2021 and St. Paul, Minnesota, in 2022. Oregon legalized a form of rent control statewide in 2018; California followed suit a year later, limiting annual rent hikes in certain housing to 10% or 5% plus inflation, whichever is lower. An effort by Orange County, Florida, which includes Orlando, to impose rent control led to a state ban in 2023 on the practice.
California voters are being asked on Tuesday’s election ballot to go a step further than the state has already. November’s ballot is asking them to allow local governments to impose any form of rent control they deem appropriate. The Justice for Renters Act, or Proposition 33, is simple and to the point: “The state may not limit the right of any city, county, or city and county to maintain, enact or expand residential rent control.”
The drive in California for rent control, or rent stabilization as it is sometimes called, is being led by the AIDS Healthcare Foundation, a nonprofit organization that operates low-income housing in Los Angeles. The same group sponsored unsuccessful rent control measures in California in 2018 and 2020. More than 100 elected officials, including four members of the state’s Congressional delegation, have backed this year’s measure, as have the Los Angeles County and San Francisco boards of supervisors.
Advocates for local rent control point to rapid rent increases in the state. During the recent pandemic, rents escalated as much as 16% annually in major urban areas, according to CoStar data. In the past year, they have been closer to 3% to 4%. The average monthly rent in San Francisco between July and September was $3,120; it was $2,290 in Los Angeles.
Not surprisingly, many real estate organizations, such as the California Association of Realtors and California Apartment Association, oppose rent control. What’s notable is that advocacy groups pushing the state to develop more affordable housing have also come out in force against Proposition 33, including California YIMBY.
The group noted in an analysis on its website that the proposal lacks an exemption for new construction. Typically rent control policies don’t apply to new developments until 15 or 20 years after completion to allow time for investors to reap sufficient revenue to cover their costs.
There's no guarantee that the current interest in rent control will continue around the country. Even Massachusetts, considered a liberal state, banned rent control back in the 1990s. That ban remains, though the state capital, Boston, petitioned the legislature to be able to regulate rents within the city limits.
Rent cap efforts
In Minnesota, when St. Paul first passed its rent control ordinance in 2022 capping annual increases at 3%, the law did not contain an exemption for new construction. Over the next few months, permits for new rental development declined in the city even as they rose in neighboring Minneapolis. Later that year, the city amended the law to include a 20-year exemption for new buildings.
The California ballot measure also allows localities to ban landlords from raising rents when tenants move out; this type of restriction, known as vacancy control, has caused owners in New York to keep thousands of housing units off the market because it’s not worth it to them to pay for maintenance, according to California YIMBY. Both Portland and St. Paul have provisions in their rent control laws that allow owners to raise rents higher than they otherwise could, when apartments became vacant.
California Assembly Bill 1482, passed in 2019, allows limited rent increases in apartments that are more than 15 years old, but not in single-family homes. However, Proposition 33’s lack of a new-construction exemption means localities could pass tougher controls.
If voters approve the ballot measure, California YIMBY warned, some towns and cities will impose stricter rent controls for the purpose of blocking new housing construction. This would be a way for localities to get around other recent state laws meant to encourage new housing development, the group said, like Senate Bill 9, which allowed duplexes in single-family zoned neighborhoods.
“This bears repeating: anti-housing lawmakers who do not care about housing affordability are supporting the Justice For Renters Act because they want to weaponize bad-faith rent controls to get out of having to follow state housing law,” the group said.
Even with an exemption for new construction or allowing rents to rise when tenants leave, there is evidence that rent control policies can cause landlords to convert their properties to owner-occupancy over time, according to a recent St. Louis Fed report. Still, the report found that these policies do accomplish what they are designed for, which is to protect tenants from excessive rent increases that may drive them out of their homes.
Supporters of Proposition 33 aren’t necessarily against exemptions like the one for new construction, said Jon Katz, volunteer director for the Yes on 33 campaign, in an email. They just want local governments to be able to pass their own laws, he said. If passed, the referendum would overturn the Costa-Hawkins Act, a 1995 state law that forbids local rent controls on housing built after that year and local rules barring landlords from raising rents when tenants move out.
“The state can still pass laws as long as they don’t weaken a local rent control law,” Katz said.