Rent regulation & tenants
Vacancy decontrol
The Costa-Hawkins guarantee that an owner may set a new tenancy's initial rent at market after a lawful vacancy, even in a rent-controlled building.
Definition
Vacancy decontrol is the Costa-Hawkins guarantee (Civ. Code § 1954.53) that when a tenancy ends by the tenant's own choice or a lawful at-fault eviction, the owner may set the next tenancy's initial rent at whatever the market bears — even in a rent-controlled building. Once the new tenancy begins, any applicable local cap re-attaches to increases within it (decontrol, then re-control).
The right has exceptions: where the vacancy results from specified owner actions — certain no-fault terminations and Ellis-related displacement — the statute and local ordinances limit or deny the reset. Local governments cannot impose "vacancy control" (carrying the old ceiling into the next tenancy) where the Act applies; that preemption survived statewide repeal initiatives in 2018, 2020, and 2024.
Why it matters in an underwrite
Turnover is where regulated rent rolls make their money: loss-to-lease on long-tenure units is harvestable only at vacancy, so the annual turnover assumption drives the entire value-add case in rent-control cities — on deeply below-market units, assuming 6% rather than 2% turnover can move stabilized NOI more than the cap itself. Model the reset only on voluntary and at-fault turnover: vacancies engineered through no-fault paths generally do not reset, and buyout vacancies can carry local strings.
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.