A ballot initiative that was defeated by California voters two years ago has been revived and will allegedly eliminate rent control on single-family homes.
According to the language of Proposition 21, the exemption only applies if the home is in the name of a 'natural person,' which excludes any single-family home owned as a partnership, family trust or otherwise.
"It's a replay of Proposition 10, which was on the ballot in 2018,” said Steven Maviglio, spokesperson for Californians for Responsible Housing. “It's 99 percent promoted and financed by Michael Weinstein's AIDS Health Foundation (AHF).”
Out of some 7 million single-family homes statewide, 31 percent or 2,157,436 are held in trust.
“It’s the classic rent control approach, which leads to much higher prices,” Maviglio told the Southern California Record. “If you're on the open market looking for a place availability of housing shrinks because people never move.”
As previously reported, a Los Angeles Times expose reported that housing units owned by Weinstein’s AHF are allegedly not well-maintained but Weinstein blames the Department of Water and Power for allegedly delaying inspections that were needed to move forward with renovations.
If passed in November, BallotPedia states that Prop 21 would replace the Costa-Hawkins Rental Housing Act, which permits counties, for example, to implement rent control on homes unless it was first occupied after 2005.
“It would apply rent control to a property even when somebody moves out and the next person moves in,” said Maviglio in an interview. “Right now, that’s called vacancy decontrol and it would be repealed and, as a result, the unit would be rent-controlled in perpetuity. There's also a hard cap on the percentage you can raise rent although landowners are allowed a ‘fair rate of return,’ which typically gets argued out at the local level.”
The ballot measure would repeal the current law and enact a new one, which could weaken statewide rent control and renter protections as well as result in a potential reduction in state and local revenues, according to the non-partisan Legislative Analyst’s Office (LAO).
"It reduces property values by prohibiting an owner from maximizing the use of their property and that in turn will reduce and lower state and local revenues,” Maviglio said. “The LAO said it would be in the high tens of millions of dollars so, that means a lot of cuts in local government.”
Critics argue that if Proposition 21 became law, landlords would sell their rental housing to new owners.
“They would sell because they wouldn't be able to maximize their investment,” said Maviglio. “A lot of people use their property as an investment and rather than dealing with the hassle and restrictions of this law, if it passed, they would pull out of the market and sell. That's exactly what happened in Berkeley. They lost tens of thousands of units in one city when rent control came in.”
Finally, Maviglio said the value of rental housing would decline because investors and potential landlords would not want to come to California and buy property.
“If there's a restriction on how much you can charge tenants, people will pay less for the property as opposed to owning a home in which you are permitted to charge what the market will bear,” he said. “You're going to get less income under a rent-controlled apartment.”