CA Landlords Must Act Now to Protect their Rental Income From Prop 33’s Extreme Rent Control

Several measures will be on the November 5th ballot that we as voters need to be aware of, but none will affect Landlords like California Proposition 33, an Extreme Rent Control measure.

“Justice for Renters Act” is a measure brought by Michael Weinstein, an anti-housing activist. This measure aims to overturn 1995’s Costa-Hawkins Act, which is currently the state’s most significant rental housing protection law. Costa-Hawkins protects certain properties, such as single-family homes and new construction, from local rent control. It also protects against vacancy decontrol, which allows landlords to bring the rental rate up to market value during vacancy periods.

Prop 33 isn’t Weinstein’s first attempt at rent control, but previous tries were both voted down in 2018 and 2020. In years past, he’s spent nearly $100 million during his previous campaigns and has vowed to continue fighting until statewide rent control passes.

Here’s what passage of Proposition 33 would mean for California landlords:

• Implementation of Vacancy Control: Prop 33 would allow cities and counties to implement vacancy control, preventing landlords from adjusting the rent to market value during times of vacancy.
• Repeal Costa-Hawkins: Prop 33 would remove exemptions for single-family homes and new construction by repealing Costa-Hawkins
• Discourage the Building of New Homes: The measure could impact the building of new homes, due to regulatory constraints.
• Market Instability: With increased rent control, the market could see an exodus of landlords, causing an already pressured housing market to become more volatile.
• Increased Pressure on Cities and Counties: Cities and counties will feel the pressure to implement more stringent rent control measures.

So what does this mean for landlords, especially those of single-family homes? It means that if your property is currently below the market value, there is a great chance that it will stay that way, and you will never be able to make up the difference. You are, in fact, robbing your present self, your future self, and the next generation.

I understand it’s hard to think about increasing the rent on your residents, you don’t want to put them out or cause a vacancy. Vacancies cost you money, but at the end of the day it’s better to have a vacancy now, rehab the property, and get more rent, than to be sitting $1,500 a month under market into the future.

I guarantee that Weinstein and the supporters of Prop 33 aren’t going to help replace the AC unit when it goes out. Or pay the property taxes when they are due. You are still going to be responsible for paying for those things, but with less income coming in. You are going to put more towards your rental property and less in your retirement account. You are going to have less for family vacations, and less to put towards maintenance.

If you’ve been holding back and not increasing rents, thinking you will regain the rent when the property becomes vacant, I strongly encourage you to rethink that.

I recently meet with an owner who is losing $2,900 a MONTH between three properties. That’s $34,800 a YEAR. The average resident stays five years in a rental home. In five years, this owner will lose $174,000.

That’s just in lost rents, let’s talk about lost sleep because the owner is worried about how they will pay the next round of property taxes, or install the new AC unit. The toll the stress takes on you because you are robbing Peter (yourself) to pay Paul (the rental property).

If you don’t want to be held hostage for the next 30 years, like landlords in San Francisco, I encourage you to speak up now and in November.

Thanks to the efforts of California Apartment Association, the last two efforts for statewide rent control were thwarted. We need to band together to make sure Proposition 33 doesn’t pass in November.

Here’s a link to make your voice heard now. https://californiansforresponsiblehousing.org/

Here’s a website with more information: https://noonprop33.com/

For more helpful information to our CA Landlords, be guided on the New Security Deposit Law in this article below.