The Costa–Hawkins Rental Housing Act of 1995 is a California law that limits how far cities and counties can go with rent control. It was enacted in 1995 and is codified in the California Civil Code.
The three biggest provisions
What Costa-Hawkins did NOT do
Why it matters for apartment investors
Since you're interested in multifamily real estate, Costa-Hawkins is a major factor in apartment valuations because it allows landlords to:
However, landlords must still comply with California's statewide tenant protection laws, including the Tenant Protection Act of 2019 (AB 1482), which imposes rent caps and just-cause eviction requirements on many properties that are not subject to local rent control.
For apartment building owners in Los Angeles County, understanding the interaction between Costa-Hawkins, AB 1482, and any local rent-control ordinance is critical when underwriting a property's future rental income.
The three biggest provisions
- Vacancy Decontrol
- When a tenant moves out, the landlord can generally reset the rent to the current market rate for the next tenant.
- Before Costa-Hawkins, some cities had "vacancy control," which limited rent increases even after a unit became vacant. Costa-Hawkins largely eliminated that practice
-
Exemption for Single-Family Homes and
Condominiums
- Cities generally cannot impose local rent control on most single-family homes or condominiums.
- Exemption for New Construction
- Local rent control generally cannot apply to residential units built after February 1, 1995.
- In some cities with older rent-control ordinances, the cutoff may relate to the date the local ordinance was adopted.
What Costa-Hawkins did NOT do
- It did not eliminate rent control in California.
- Cities such as Los Angeles, Santa Monica, West Hollywood, and San Francisco can still have rent-control ordinances for many older apartment buildings.
- It mainly sets statewide limits on what local governments can regulate.
Why it matters for apartment investors
Since you're interested in multifamily real estate, Costa-Hawkins is a major factor in apartment valuations because it allows landlords to:
- Incase rents to market levels when tenants vacate.
- Operate many newer properties without local rent-control restrictions.
- Exclude most single-family rentals from local rent control.
However, landlords must still comply with California's statewide tenant protection laws, including the Tenant Protection Act of 2019 (AB 1482), which imposes rent caps and just-cause eviction requirements on many properties that are not subject to local rent control.
For apartment building owners in Los Angeles County, understanding the interaction between Costa-Hawkins, AB 1482, and any local rent-control ordinance is critical when underwriting a property's future rental income.