The Costa-Hawkins Rental Housing Act is a 1995 California law that limits how far cities can take rent control. It does three main things: it exempts newer buildings from local rent caps, it exempts most single-family homes and condos, and it lets landlords reset rent to market when a tenant moves out, known as vacancy decontrol.
For investors, Costa-Hawkins is the reason a newly built ADU isn’t subject to local rent control, and the reason a 1970s fourplex in Los Angeles is a very different investment than a 2000s fourplex next door. Here’s how it works in 2026.
What the Costa-Hawkins Act does
Costa-Hawkins lives in California Civil Code 1954.50 through 1954.535. In plain English:
- New construction exemption. Cities can’t cap rent on units that got their certificate of occupancy after February 1, 1995. Cities that already had an earlier cutoff, like Los Angeles at October 1978, keep that earlier date.
- Single-family and condo exemption. Cities generally can’t cap rent on units that can be sold separately, like single-family homes and condos, with some exceptions.
- Vacancy decontrol. When a tenant leaves voluntarily or is evicted for not paying rent, the owner can reset the rent to market. Rent control applies again to the new tenant from that new starting point.
Costa-Hawkins and AB 1482: how they fit together
Costa-Hawkins limits local rent control. It doesn’t stop the state’s own rent cap. The Tenant Protection Act (AB 1482) caps annual increases at 5% plus local inflation, with a 10% maximum, and requires just cause after 12 months.
| Type of unit | Local rent control? | AB 1482 statewide cap? |
|---|---|---|
| Apartment built before 1995 (or before the city’s earlier cutoff) | Yes, if the city has rent control | No, local rules apply instead |
| Apartment built after 1995 | No (Costa-Hawkins) | Yes, once it’s more than 15 years old |
| Single-family home or condo owned by an individual | No (Costa-Hawkins) | No, if the required notice is in the lease |
| Single-family home owned by a corporation or REIT | No (Costa-Hawkins) | Yes |
| ADU built in the last 15 years | No (Costa-Hawkins) | No (15-year new construction exemption) |
| Owner-occupied duplex | Varies | No |
I go deeper on the state cap in AB 1482 and the ADU Exemption and on the latest numbers in California’s Rent Cap for 2026–2027.
How Costa-Hawkins treats ADUs
A newly built ADU gets its certificate of occupancy long after 1995, so it’s exempt from local rent caps under Costa-Hawkins. It’s also exempt from AB 1482 for its first 15 years. That makes a new ADU one of the few rental units in Southern California where you can set and adjust rent to the market.
But adding an ADU can change the status of the main house. In Los Angeles, LAHD’s ADU guidance says:
- A detached ADU on a pre-1978 single-family lot is generally not subject to the RSO, but the single-family home may become subject to it because the property now has a second unit.
- A newly built attached ADU on a pre-1978 home is generally not RSO, but the original home may be.
- An ADU converted from original pre-1978 living space can put both units under the RSO.
- An ADU converted from non-living space like a garage is generally covered only by LA’s Just Cause Ordinance.
That’s a detail a lot of LA buyers miss. If you’re planning to keep the main house as a market-rate rental, check RSO status before you build. LAHD’s RSO Determinations Unit can confirm.
Costa-Hawkins in the cities we work in
Los Angeles. The RSO covers most rental units built on or before October 1, 1978. Newer buildings fall under the state cap and LA’s just cause rules. If you’re buying in LA, why savvy investors target new construction in LA City explains why the build date matters so much.
Santa Ana. The only Orange County city with broad rent control. Under Santa Ana’s Rent Stabilization and Just Cause Eviction Ordinance, the rent cap applies only to buildings built on or before February 1, 1995, exactly tracking Costa-Hawkins. The annual cap is the lower of 3% or 80% of CPI. I break down the impact in Santa Ana’s Rent Cap Is Now 2.87%.
Long Beach and most of Orange County. No local rent control, so AB 1482 is the main cap. See Is Long Beach a Buyer’s or Seller’s Market for Multi-Units?
Repeal attempts: will Costa-Hawkins survive?
Voters have rejected repealing Costa-Hawkins three times:
- Prop 10 (2018): failed
- Prop 21 (2020): failed
- Prop 33 (2024): failed, about 60% No to 40% Yes
In the legislature, SB 466, which would have let cities apply rent control to single-family homes, condos and apartments older than 15 years, died in 2024 without a hearing.
As of October 2026, Costa-Hawkins is fully in effect. It’s still worth watching, because repeal efforts come back regularly.
What it means when you buy
Here’s how I’d think about it for an Orange County or LA County investor:
- Pre-1978 LA multi-unit: Expect RSO rules on existing units, including relocation costs if you ever need a unit back. Rents below market may stay there for years. See What to Watch Out For During Escrow With Existing Tenants.
- Single-family home plus a new ADU: The ADU is exempt from local caps. Check whether the main house’s status changes in your city.
- Multi-unit adding ADUs under SB 1211: The new ADUs are exempt from local rent caps, which can raise the property’s average rent over time.
- Santa Ana pre-1995 buildings: Underwrite with the 3% cap in mind. Santa Ana’s 3% cap and your investment shows the effect over time.
FAQ
What is the Costa-Hawkins Act?
A 1995 California law that exempts newer buildings and most single-family homes and condos from local rent control, and allows vacancy decontrol.
Does Costa-Hawkins apply to ADUs?
Yes. A newly built ADU is exempt from local rent control because it was built after 1995. It’s also exempt from AB 1482 for 15 years.
Is Costa-Hawkins still in effect in 2026?
Yes. Prop 33, which would have repealed it, failed in November 2024.
What is vacancy decontrol?
When a tenant moves out voluntarily or is evicted for nonpayment of rent, the landlord can set the next tenant’s rent at market.
Does Costa-Hawkins apply to single-family homes?
Generally yes. Most single-family homes are exempt from local rent control, though AB 1482 can still apply if a corporation or REIT owns the home.
Does Santa Ana rent control apply to my property?
Santa Ana’s rent cap applies only to buildings built on or before February 1, 1995. Check the city’s property tool or contact the city to confirm.
The bottom line
Costa-Hawkins is the reason build dates matter so much in California rental investing. It keeps new ADUs and most single-family homes out of local rent control and lets owners reset rent on turnover. For an investor adding ADUs in Orange County or LA County, it’s a big part of why new units can be priced at market.
👉 Book a buyer ADU consult call to go through your options with Dylan
Prefer to talk now? Call Dylan Serna, ADU Realtor at 714-860-2868.
Dylan Serna | The ADU Realtor | eXp Realty | DRE #02217359
This post is general information, not legal advice. Rent control status depends on your city and your property’s history. Confirm with the city or a landlord-tenant attorney.
