Proposition 33 Impact: What Landlords Should Know About Costa-Hawkins

By Elyssa Matson Jones

When it comes to navigating California’s rental market, few laws shape the landscape as much as the Costa-Hawkins Rental Housing Act. In 2024, Proposition 33 sought to challenge these protections but, voters decisively rejected it. Here is what Orange County landlords need to know about the outcome. Why Costa-Hawkins remains essential? The ongoing importance of staying informed.

Protecting Costa-Hawkins safeguards investment, encourages housing development, and maintains stability in California’s rental market.

What Was Proposition 33?

In the November 2024 election, California voters considered Proposition 33 (the "Justice for Renters Act"), which aimed to repeal the Costa-Hawkins Rental Housing Act and expand local rent control authority. Key proposed changes included:

• Vacancy Control: Rent for vacant units would be capped at prior tenant rates, preventing landlords from adjusting to market value.
• Local Power Expansion: Cities could enact stricter rent control measures beyond current state limits.
• Broader Application: Single-family homes, condos, and newer properties could face the same restrictions as multi-unit buildings.

Outcome: Proposition 33 was rejected by voters, with approximately 60% voting No and 40% voting Yes. This preserved the Costa-Hawkins protections and maintained flexibility for landlords in setting market-rate rents upon vacancy.

Why Costa-Hawkins Matters for Property Owners

Enacted in 1995, the Costa-Hawkins Rental Housing Act provides critical safeguards for landlords and investors:

1. Market-Rate Rentals: Landlords can set market-driven rental rates for vacant properties, supporting fair returns on investment.
2. Exemptions: Single-family homes, condos, and properties built after February 1, 1995, are exempt from local rent control ordinances.
3. Statewide Consistency: Uniform rules prevent a patchwork of conflicting local policies, creating predictability for property owners.

These provisions encourage property improvements, sustain investor confidence, and help address California’s housing supply challenges.

What Could Have Happened if Proposition 33 Passed?

Although Proposition 33 failed (similar to prior attempts like Prop 10 in 2018 and Prop 21 in 2020), understanding the potential risks highlights why Costa-Hawkins is so valuable. A repeal could have led to:

• Reduced Property Values: Capped rental income would discourage investment and lower property appeal.
• Housing Development Slowdown: Developers might delay or halt new projects, worsening the housing shortage.
• Compliance Challenges: A complex mix of local rent control laws would increase regulatory burdens for landlords.

For Orange County property owners, these changes could have complicated property management and reduced overall housing availability.

Key Takeaways for Orange County Landlords

1. Stay Updated: Legislative proposals can impact your property’s value and rental strategy. Monitor developments closely.
2. Advocate for Balanced Solutions: Support policies that protect both tenants and property owners for a healthy market.
3. Plan Ahead: Partner with experienced property management professionals to navigate regulations and optimize your leasing approach.

Final Thoughts

Proposition 33’s rejection reinforces the importance of Costa-Hawkins in maintaining stability and encouraging investment in California’s competitive rental market. For landlords, preserving these protections is about more than rent control. It’s about fostering long-term growth and housing availability.

If you’re looking to safeguard your rental properties while staying compliant with evolving laws, EJ Properties can help. Let us partner with you to maximize your investment potential.

Related Reading

• Should You Put Your Investment Property in an LLC? – Insights for California Owners – Explore asset protection strategies that complement strong rental regulations.
• California Security Deposit Limits: Understanding AB12 – Key updates on landlord-tenant rules and compliance for rental properties.
• California Senate Bill 721 "Balcony Bill" Due January 1, 2026 – Stay ahead of new inspection requirements for multi-unit rental properties.

Want to read the full text of the Costa-Hawkins Rental Housing Act yourself? View the official statute here: California Civil Code § 1954.50 et seq. (Costa-Hawkins).