Election 2020: California strikes down rent control in ballot voting
California voters on Tuesday rejected a proposal to extend rental controls to homes over 15 years.
Proposition 21 would have taken the place of the Costa Hawkins Rental Housing Act, which prevents cities from capping rent on buildings built after 1995. The bill would also have paved the way for local governments to limit rent increases for vacant apartments, even if they do not coincide with state limits.
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Approximately 60% of voters voted against the bill, following a similar scenario two years ago when 59% of voters rejected Proposition 10, a local government bill introducing rental controls on all types of housing. California remains one of five states that have a method of controlling rent.
Protesters display placards as they call for assistance to renters and homeowners at risk of eviction while the state emerges from the ongoing COVID-19 crisis during a demonstration on Sunday, October 11, 2020 on Boston Common in Boston . (AP Photo / Steven Senne)
"California has a housing supply problem - there just aren't enough homes to meet demand for rent or purchase, and rent control has consistently proven to be an ineffective response to escalating home prices caused by housing shortages." Said David Howard, executive director of the National Rental Home Council, a nonprofit that represents the interests of the single family home industry.
Controlling rents is a sensitive issue. A study by Stanford Business School found that rent control works against both small landlords and tenants alike, according to Jonas Bordo, CEO and co-founder of Dwellsy, the marketplace for house and apartment rentals.
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"By keeping prices low and restricting landlords' ability to renovate properties, rent control has shown that rent controls are reducing the supply of apartments and increasing total rents," said Bordo. "Reduced rents and the prospect of less control over their properties mean that many current or prospective landlords are either not renting units or building new ones."
Protesters block the entrance to the courthouse during a rally at the Boston Housing Court in front of the Edward W. Brooke Courthouse in Boston on October 29, 2020. Protesters called for Law H.5018 to be passed to ensure hose stability during the Covid -19 pandemic. (Photo by David L. Ryan / The Boston Globe via Getty Images)
Since new property development in California is very difficult, the state has been more landlord-friendly by protecting the interests of owners of existing real estate rather than allowing new developments that could increase supply and lower rents, he said.
If Proposition 21 had been passed, it could have weighed heavily on struggling landlords during the pandemic due to the cost of ownership. Instead, the state should push for more affordable housing, Howard said.
"It is time for sensible legislation that does one thing: bring more quality, affordable housing across the state," said Howard. “When these costs rise - for things like property taxes, assessments, repairs - the owners have to adjust the rent accordingly. Rent control makes that impossible. "
Dhara is a reporter for Yahoo Money and Cashay. Follow her on Twitter at @Dsinghx.
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