Three Strikes and You’re Out – California’s Rent Control Battle

In 1995, California enacted the Costa-Hawkins Rental Housing Act with an aim of balancing tenant protections with property owner rights. Costa-Hawkins restricted rent control on apartments built after 1995, single-family homes and condos and allowed landlords to adjust rents to market rates after a tenant moves out.  The act has been under siege in recent years by the AIDS Healthcare Foundation (AHF) – a global nonprofit focused on medical care and advocacy for people living with HIV/AIDS – which funded failed California ballot propositions in 2018 and 2020 seeking to modify the Act.

2024’s Proposition 33 – also funded by AHF – intended to repeal Costa-Hawkins entirely, allowing municipalities to implement rent control on all residential properties and restrict rent increases after a tenant moves out.  California voters decisively rejected Prop 33, with approximately 60% of voters opposed to the measure.

Prop 34, which was designed by the California Apartment Association to strip AHF of its ability to fund future rent control propositions, requires healthcare providers to spend 98% of net revenues directly on patient care (as opposed to rent control initiatives) or risk losing their tax-exempt status or licenses. Prop 34 passed by 51%, a slim majority, providing housing advocates with a second victory against rent control this November.

While Californians spoke out against rent control at the ballot box in 2024, the state’s rent control battle is likely to continue, although funding such initiatives has become significantly more challenging.

Beyond Late Fees – Rewarding Tenants Who Pay Rent on Time

A recent study by Havard University reported that about 12 million U.S. renters spend more than half of their income on housing.  And in an inflationary environment where housing costs are growing faster than income, innovative landlords are both penalizing tenants who pay late while rewarding tenants who pay on time.

Late fees, common in the industry, are often regulated by local governments and range widely (from a flat fee of $25-$50 to 5%-10% of the monthly rent).  In contrast, tenant reward programs provide points to tenants who pay rent on time and renew their leases and these points can be redeemed for prizes or gift cards (like credit card reward programs).  Some incentive programs also provide positive reporting to credit agencies allowing on-time payers to improve their credit scores.  This proactive approach can increase tenant retention rates, as renters are incentivized to renew their leases and feel more valued for exhibiting responsible financial behavior.  Pathfinder recently rolled out a similar rewards program at several properties – with the goal of increasing tenant retention – and initial feedback has been positive.

Incentive programs are more than just a trend – they’re a smart investment in tenant satisfaction and property management efficiency. By fostering a positive rental experience, landlords and property managers can create loyal tenants who prioritize timely payments and contribute to a constructive rental community.