The income from rent keeps buildings maintained and repaired and puts money in landlords’ pockets. There are statewide and local ordinances regulating rent increases, so you’re not in a business where you can freely increase prices as you see fit. You can try to maximize your income while complying with legal limitations and what the market will bear.
Anthony Burton helps his property-owning clients make the most of their investments, warns them of potential legal dangers, and represents them in legal actions and before government bodies. If you’re a residential landlord with questions about rent limitations, call him at (949) 244-4207.
Statewide Rent Control
California passed numerous housing-related laws in 2019 (AB 1482). They covered, among other issues, rent control in some properties while exempting others. California’s regulations aim to prevent what the legislature saw as excessive rent hikes. There are also rent controls in other statutes and local ordinances.
A tenant’s highest annual rent increase is 5% plus the percentage change in the cost of living, or 10%, whichever is lower. The cost-of-living component is based on a statewide consumer price index (CPI) as reported by the Department of Industrial Relations unless you live in the following counties where a regional CPI applies:
- Orange and Los Angeles County
- San Diego
- San Bernardino and Riverside
- San Francisco, Alameda, Mari, Contra Costa, and San Mateo
The starting rent is based on March 2019 data. These limits only apply to current tenants. California landlords can set rent rates when signing new lease agreements if existing occupants aren’t involved.
Properties Exempt from State Rent Controls
Rent control doesn’t apply to these properties or situations:
- Tenancies where none of the tenants have lived in the unit for 12 or more months. The law doesn’t cover occupancies of less than a year
- Affordable housing
- Owner-occupied properties with two separate dwelling units in one structure with the owner occupying one of them as their principal residence
- Multi-family residences with certificates of occupancy issued 15 or fewer years before their construction
- Non-owner-occupied condominiums, single-family homes, and other properties that can be sold independently. A person, a limited liability company or partnership owned by people, or another form of a “natural” person, like a revocable trust for individuals, can hold title. The law covers property owned by businesses, such as real estate investment trusts, corporations, or limited liability companies with corporate members
- Dormitories owned and operated by schools
Call us if you have questions about whether your property is covered by state rent control.
Anti-Discrimination Laws
You’re free to increase the rent as permitted by statute and local ordinances, but you can’t pick and choose who gets a rent increase, what amount, or not at all, based on their “protected class” (a tenant’s characteristics or qualities). Under the federal Fair Housing Act, those classes are:
- Race
- Age
- Religion
- Gender
- Disability
- Sexual orientation
- Familial status
- Nationality or origin
There are also tenant protections under the state’s Fair Employment and Housing Act. California’s Unruh Civil Rights Act of California also makes rent increases illegal if they’re due to the following:
- Income source
- Medical condition
- Immigration status
- Primary language
- Veteran or military status
- Physical appearance
Tenants are also protected from retaliatory, unequal rent increases because they:
- Organized or joined a tenant’s group or union
- Filed a complaint with a government body claiming your property is unsafe or unhealthy
- Exercised their rights under the law
- Complained about your property’s habitability
Violating these laws could result in paying fines, damages, and the tenant’s legal costs and attorneys’ fees.
Rent Increase Frequency
Landlords can raise the rent twice every 12 months:
- More frequently, if it’s allowed in the lease
- If adequate notice is given (30-days’ notice, 90 days if the increase is more than 10%)
- If the total yearly increase doesn’t violate state or local limits
Some localities allow different time frames for rent increases
Local Rent Control Ordinances
Cities and counties can have local rent control laws consistent with state law and set rent caps at any level they choose as long as buildings covered by AB 1482 are unaffected. Existing local government rent control ordinances on pre-1995 units can remain.
Local ordinances cover the City of Los Angeles, Los Angeles County, and the city of Santa Ana.
We’re Here to Help
If you’re a residential landlord with questions about rent increased or are involved in a dispute with a tenant who claims you illegally raised their rent, call AWB Law, PC at (949) 244-4207 or complete our online contact form today.
