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Special Report

California Proposition 21

Fourth Quarter 2020

California Proposition 21 Could Place Significant Restrictions on Apartments

California initiative set to upend rent control. Proposition 21, which is on the November ballot, introduces a new law surrounding rent control and amends existing legislation. The largest proposed change alters how rents are adjusted during tenant turnover. Under the two existing laws that dictate rent control in the state, operators are free to lift the monthly rent back to the market rate upon a vacancy, often called vacancy decontrol. However, Proposition 21 would restrict owners to a 15 percent rise in rents when a new tenant moves in, creating vacancy control. That gain can be realized over three years in any manner that owner chooses, along with any locally permitted increase. After that, rent increases will be dictated by the local rental board.

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