The Costa-Hawkins Rental Housing Act is a 1995 California state law that sets the outer limits of local rent control. It permanently exempts single-family homes, individually owned condominiums, and buildings that received a certificate of occupancy after February 1, 1995, from any city or county rent cap, and it lets landlords reset the rent when one tenant moves out and another moves in. Amendments since then have added caps on how far that reset can go, so the law today is stricter on landlords than the original version.
Which Properties Are Exempt from Local Rent Control
Civil Code Section 1954.52 identifies three categories of housing that no California city or county can subject to local rent stabilization. If a property fits any one of them, the owner sets both the initial rent and every later increase without regard to a local ordinance.1California Legislative Information. California Civil Code 1954.52 – Residential Rent Control
- New construction: units that received a certificate of occupancy after February 1, 1995. Some cities that already had rent control on the books before that date use an earlier cutoff. The date does not roll forward, so the pool of rent-controllable housing in any given city can only shrink over time.
- Separately alienable properties: dwellings that can be sold on their own, apart from any other unit. In practice, this covers single-family houses and individually owned condominiums.
- Previously exempt units: properties that were already exempt from a local ordinance on or before February 1, 1995, under that jurisdiction’s own new-construction exemption.
These exemptions take effect automatically. An owner does not need to file paperwork or get an official determination from the city.
The Condominium Wrinkle
Condominiums get a more complicated treatment. A condo unit qualifies for the exemption only after the subdivider has sold it to a bona fide buyer for value. An unsold condo still held by the developer is not exempt and stays subject to any local rent cap, with the initial rent locked at the lawful rent on May 7, 2001.1California Legislative Information. California Civil Code 1954.52 – Residential Rent Control There is a narrow exception: if every other unit in the building has been sold and the subdivider has lived in the last unit as a primary residence for at least a year, that final unit becomes exempt too.
Vacancy Decontrol: Resetting Rent Between Tenants
The provision landlords and tenants argue about most sits in Civil Code Section 1954.53. When a tenancy ends and a new one begins, the owner can set the initial rent for the incoming tenant without being bound by the prior tenant’s rate.2California Legislative Information. California Civil Code 1954.53 – Residential Rent Control The purpose is to keep rents in controlled buildings from staying frozen through decades of turnover.
Caps on the Reset
The reset is not unlimited anymore. When a tenant voluntarily moves out, abandons the unit, or is evicted specifically for nonpayment of rent, the owner can raise the rent for the next tenant to the greater of two figures: 15 percent above the previous rent, or 70 percent of the prevailing market rent for comparable units in the area. The owner can use this reset no more than twice for any given unit.2California Legislative Information. California Civil Code 1954.53 – Residential Rent Control This cap replaces what had been an unrestricted right to jump straight to market rate after a vacancy.
In a place like San Francisco or Los Angeles, where controlled rents can sit far below market, the 70-percent-of-market floor usually gives the landlord more room than the 15-percent bump. Where controlled rents are close to market, the 15 percent figure often does more work. Either way, doubling a unit’s rent overnight after a long-term tenant leaves is no longer allowed in most rent-controlled jurisdictions.
When the Owner Cannot Reset
If the landlord ended the previous tenancy by issuing a no-fault termination notice (such as a 30- or 60-day notice under Section 1946.1) or by changing the terms of the tenancy, the right to set a new initial rent does not apply.2California Legislative Information. California Civil Code 1954.53 – Residential Rent Control Without that restriction, an owner could push out a below-market tenant just to reset the rent. The same limitation applies when a landlord terminates or declines to renew a government subsidy agreement that had limited rent for a qualifying tenant; in that case the owner cannot set a new initial rent for three years after the contract ends.
The Original Occupant Rule
Section 1954.53(d) catches many tenants off guard. Once the original occupants who signed the lease no longer permanently live in the unit, the landlord can raise the rent on any remaining subtenant or assignee by any amount the law otherwise allows.2California Legislative Information. California Civil Code 1954.53 – Residential Rent Control The common scenario: two roommates sign a lease in a rent-controlled unit, one moves out and is replaced, then the last original signer leaves. At that point the landlord can treat it as a new tenancy and reset the rent.
As long as at least one original signer still lives in the unit, the provision cannot be used. A landlord also does not waive the reset right by accepting payments from a subtenant. The lease itself may still prohibit subletting, and consenting to a sublease does not cost the landlord the eventual right to reset.
What Cities Cannot Do
Costa-Hawkins works as a ceiling on local rent regulation. Cities and counties keep authority over older multi-family apartment buildings that don’t fall into an exempt category, but they cannot push beyond the lines the state drew. Any local ordinance that tries to control rents on exempt properties, or to eliminate vacancy decontrol, is void under state law.1California Legislative Information. California Civil Code 1954.52 – Residential Rent Control
Cities also cannot build a rolling rent control date that would sweep newer buildings under price caps as they age. The February 1, 1995, cutoff is fixed, which gives developers long-term certainty that projects built after that date won’t later be pulled into a local rent control scheme. Municipalities cannot require landlords to justify market-rate rent on a vacant unit or demand approval before listing it at a new price after turnover.2California Legislative Information. California Civil Code 1954.53 – Residential Rent Control If a city tries to impose vacancy control (where rent stays flat regardless of turnover), Costa-Hawkins is the primary legal defense, and landlords can challenge the ordinance in court.
How the Law Interacts with the Statewide Rent Cap
Costa-Hawkins is not the whole picture. The Tenant Protection Act of 2019 (AB 1482), codified at Civil Code Sections 1947.12 and 1946.2, added a statewide layer of rent and eviction protections that reaches many properties Costa-Hawkins exempts from local control. AB 1482 limits annual rent increases to 5 percent plus the local change in the Consumer Price Index, or 10 percent, whichever is lower.3California Legislative Information. California Civil Code 1947.12 A single-family house built in 2010, for instance, is outside local rent control because of Costa-Hawkins but still subject to the statewide cap unless it separately qualifies for an AB 1482 exemption.
Single-family homes and condominiums escape AB 1482 only when two conditions are both met. The property cannot be owned by a real estate investment trust, a corporation, or an LLC with at least one corporate member. And the owner must give the tenant a specific written notice stating the unit is not subject to Sections 1947.12 and 1946.2; for tenancies starting on or after July 1, 2020, that notice must be in the lease itself.3California Legislative Information. California Civil Code 1947.12 Skip the notice and the exemption fails, regardless of Costa-Hawkins status.
AB 1482 also exempts units that received a certificate of occupancy in the previous 15 years, but this exemption rolls forward. A unit built in 2011 was exempt through the end of 2025 and becomes covered on January 1, 2026. That’s a different timeline from Costa-Hawkins’ fixed 1995 date, and owners of newer buildings need to track it. AB 1482 is currently set to expire on January 1, 2030; if it isn’t renewed, only Costa-Hawkins and any applicable local ordinances would remain.3California Legislative Information. California Civil Code 1947.12
Repeal Attempts and the Law’s Future
Costa-Hawkins has survived three ballot measures aimed at repealing or weakening it. Proposition 10 in 2018 and Proposition 21 in 2020 both failed. Proposition 33 in November 2024 would have repealed the act entirely and given cities unrestricted authority to impose rent control on any property type and to eliminate vacancy decontrol. Voters rejected it, with 62 percent voting no. The law remains in effect as written, and any future repeal would take another ballot measure or action by the state legislature.