Californians Reject Rent Control — Again — in Defeat of Prop. 21

California voters on Tuesday rejected Proposition 21, which would have allowed cities to enact more restrictive forms of rent control.

It was the second time in two years that voters weighed in on the issue.  In returns Tuesday night, at around 11 p.m., Prop. 21 was called after trailing by a nearly 20-point margin, with 59.4% votes opposed compared to 40.6% in support.

Proposition 10, which would have repealed the Costa-Hawkins Rental Housing Act, was also soundly defeated in 2018 by a similar margin.

"This is a really sad day for the state of California," said Ged Kenslea, the communications director for the Yes on 21 campaign, as well as for the AIDS Healthcare Foundation, the proposition's sponsor and main funder. "We'll continue on with the fight."

Prop. 21 would have allowed cities to impose rent control on buildings 15 years or older, including some single-family homes and condos owned by people who have more than two houses or condos. And it would have brought back vacancy control, which limits how much a landlord can raise the rent when a tenant leaves their unit.

"This just would have made it impossible to grow the housing stock in California," said Sid Lakireddy, the president of the California Rental Housing Association, which opposed the measure. "It feels (like) a huge weight off the shoulders." 

Opponents vastly outraised supporters of the measure. As of Oct. 14, five political action committees had raised $59.4 million to defeat Prop. 21. They were backed by the California Apartment Association, the California Association of Realtors, the California Rental Housing Association, Essex Property Trust, Mosser Companies and other real estate developers or trusts.

The AIDS Healthcare Foundation, a Los Angeles-based nonprofit dedicated to providing medical care for people living with AIDS, contributed $35.3 million of the Yes on 21 campaign's $40.2 million war chest.

Opponents of Prop. 21 argued that rent control does not make cities more affordable on the whole. They pointed to a 2019 Stanford study of rent control in San Francisco, which found the policy decreased the available rental stock in the city by 15% and increased rents in non rent-controlled units.

Supporters said expanding rent control could have helped keep rents predictable and stable, so that fewer people would face unexpected dramatic rent increases. They pointed to the same Stanford study that found people who lived in rent-controlled apartments in San Francisco were 20% less likely to leave the city as a result of rising rents.

A recent state law has already put some limits on rent increases. Assembly Bill 1482 by Assemblymember David Chiu, D-San Francisco, went into effect in 2019 and prevents rents on any building 15 years or older from increasing more than 5% each year, plus the rate of inflation. The law includes rentals of single-family homes that are owned by corporations, and it provides renters in those buildings with protections against certain types of evictions.

The earliest rent control policies in California were adopted in the late 1970s and early 1980s. They typically capped rent increases at or close to the rate of inflation, with allowances for landlords who needed to make repairs. The policies also typically included protections against certain types of evictions.

Only five cities — Berkeley, Santa Monica, Cotati, East Palo Alto and West Hollywood — have adopted vacancy control.

In 1995, lawmakers passed the Costa-Hawkins Rental Housing Act, which outlawed vacancy control. That gave landlords the freedom to reset rent to market rate when a tenant moves out. It also froze the existing rent control ordinances in place so that no new buildings could be added. That means if a city adopted rent control in 1980, buildings built after 1980 could not be included. And any new city that adopted rent control — such as Richmond, which went into effect in 2017 — couldn’t impose rent control on any buildings in the city built after 1995.