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How Will Repealing Rent Control Limits In California Affect Construction?

Rent Control Limits

We’re just one month away from one of the biggest elections in California that we’ve had in recent years because Costa Hawkins could be repealed, sending the rental housing market into a direction which many analysts feel will make rents more un-affordable and hurt the state even more.

How Repealing Costa Hawkins Will Affect Construction

Besides slowing down or stopping some construction of some rental properties in California, repealing Costa Hawkins may also have an adverse effect on the construction labor market as well.

On a Marcus & Millichap web panel Thursday, Sacramento Regional Builders Exchange Director of Government Affairs Damon Conklin said the state is already facing a shortage of construction workers.

Repealing Costa-Hawkins would make it worse, he said. “Costa-Hawkins offers protection for our industry. It provides predictability, forecastability for projects in the pipeline,” Conklin said during the webcast, called Proposition 10: A Threat to All Renters and Property Owners. “When those protections are threatened … then all of a sudden it would have a chilling effect on the housing market and construction industry.” 

Californians will head to the ballot in November and ultimately decide whether cities could adopt rent control ordinances.

Passed in 1995, the Costa-Hawkins Act prevents cities from expanding rent control laws, prohibits rent control on newly constructed apartments built after 1995 and single-family homes and condos, and allows multifamily owners to raise rents to market rate when tenants move out.

About two dozen cities in the state, such as Santa Monica and Berkeley, adopted some form of rent control ordinance before Costa-Hawkins went into effect. Repealing Costa-Hawkins would allow other cities to adopt their own rent control policies.

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