Rent regulation & tenants
Costa-Hawkins Act
State law exempting post-February 1995 construction and single-family homes/condos from local rent caps and guaranteeing vacancy decontrol statewide.
Definition
The Costa-Hawkins Rental Housing Act (Civ. Code §§ 1954.50–1954.535, enacted 1995) sets the outer limits of local rent control in California. It exempts from local price caps any unit first occupied after February 1, 1995 and any separately alienable unit (single-family homes, condos), and it guarantees vacancy decontrol — the owner's right to set a new tenancy's initial rent at market after a lawful vacancy.
Courts have read it broadly: Palmer/Sixth Street v. City of Los Angeles (2009) applied it to strike down forced below-market rents in inclusionary programs, until Gov. Code § 65850(g) (AB 1505, 2017) restored the inclusionary rental channel. Agreed regulatory restrictions — density-bonus and LIHTC covenants — sit outside the Act entirely.
Why it matters in an underwrite
Costa-Hawkins is why local rent control's practical bite is confined to older stock: post-1995 (and in legacy cities, post-1978/79) buildings take only AB 1482's looser statewide cap, and every regulated unit marks to market at turnover. Repeal attempts keep coming — statewide initiatives to repeal or gut the Act failed in 2018, 2020, and 2024 — so a long hold in a rent-control city should at least stress a repeal scenario in which vacancy decontrol and the new-construction exemption disappear.
Sources & related guides
See also
See the term in the law itself
Read the controlling text in the Code Library, or ask the AI how it applies to your project.
Last reviewed 2026-07-29. General information, not legal advice.