The Costa–Hawkins Rental Housing Act ("Costa–Hawkins") is a California state law, enacted in 1995, which places limits on municipal rent control ordinances. Costa–Hawkins prohibits cities from establishing rent control over certain kinds of residential units, e.g., single family dwellings and condominiums, and newly constructed apartment units; these are deemed exempt. It also prohibits municipal "vacancy control", also called "strict" rent control.
If an apartment is under "vacancy control", the city's ordinance works to deny or limit an owner's ability to increase its rent to new tenant(s). It works this way even in cases where the prior tenant voluntarily vacated the apartment or was evicted for cause (such as failure to pay rent). In other words Costa–Hawkins, by now prohibiting "vacancy control" in the above circumstances, mandates that cities allow an apartment owner the right to rent it when vacant at any price (i.e., usually the market price).
Rent control in California is largely the creation of its municipalities. This ability of city governments is limited by the federal and state constitutions, as well as federal and state laws. Costa–Hawkins is a key state statute enacted to manage the power of California cities to regulate their rental markets.