“The mere possibility that California’s ban on rent control could be repealed is making Wall Street investors and landlords jittery.

Earlier this month, analysts from SunTrust downgraded Equity Residential(NYSE: EQR) from “buy” to “hold” based in part on Proposition 10, a California ballot initiative that would give cities more leeway to adopt rent new control policies. Close to half of Equity Residential’s portfolio is in California and there is “essentially nothing priced into the stock” to address the uncertainty, according to the SunTrust report.

Currently, 15 California cities have some form of rent control that were grandfathered in when the 1995 Costa-Hawkins Act limited how cities could implement rent control policies. Some of the limitations include that rent control can only apply apartments built before 1995.

If the ban is repealed, cities could create new rent control laws, extend current ones to encompass more homes, as well as expand rent control to cover single-family homes. They could also prohibit landlords from raising rents to market prices when tenants move out.”

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