There is no sugarcoating the fact that rental prices in California are extremely expensive, and for many, just plain unaffordable. If you choose to or need to rent in California, you can expect to pay a substantial amount of your monthly take-home pay on accommodation. However, there is some good news, because there are local laws in place to help protect you.
But before you commit to anything, make sure you take a deeper dive into the main California rental laws and loopholes. It should help to give you a better idea of what you are getting yourself into, and it might even save you from making a big mistake. Let’s get started.
- The Legal Maximum Rent Rise
- What is the CPI in my District?
- Additional Regional Rent Controls
- Rental Exceptions to AB-1482
- Need More Information About Living In California?
- Final Thoughts
The Legal Maximum Rent Rise
Let’s start with a few of the basics. This section covers most of the main areas of legislation. Next, I will look at some of the additional rent controls in specific California cities/districts. Plus, I will review the major exceptions that leave landlords free to increase rents above the stipulated maximums. But first, let’s get acquainted with something called AB-1482.
So, what is it?
AB-1482 is a piece of legislation passed in 2019 as part of the Tenancy Protection Act. It offers basic protection for tenants to ensure that their rents cannot be unfairly raised beyond reasonable market levels.
What are the main points?
Rents can only be increased by a maximum of 5% in any 12 months. However, the landlord can include a rent rise in addition to this in line with the Consumer Price Index (CPI) percentage increase. In this instance, the increase is capped at anything over 5%. This means that over a year, a rental increase can be no more than 5% + 5% (CPI) which is 10%.
If, for example, the previous 12 months’ CPI increase was 3%, then the maximum rental increase could be no more than 5% + 3% = 8%. It is worth noting that until recently, the CPI % was set at between 3% to 4.5% depending on where you lived.
However, in August 2022, the law was amended following a spike in inflation as a result of the pandemic. The new law increased the maximum CPI to 5% across all cities in California. Undoubtedly, this makes things much less complicated and makes the core legislation easier for tenants and landlords alike.
One final note…
When a rent increase is proposed, the landlord must give you a minimum of 60 days written notice. If the rent is not governed by AB-1482, which we will come on to later, and the rental increase exceeds 10%, you must receive at least 90 days written notice.
What is the CPI in my District?
As I write this, I can assure you that the CPI of most California cities or towns is now below 5%. Additionally, it is now likely to stay this way for some time to come, which makes this figure much more relevant.
So, how do you find the CPI for where you want to live?
The easiest way is to head over to the government website at the Bureau of Labor Statistics. They have the entire database of CPI statistics for the whole country. This includes California, but it is further subdivided into different cities and districts.
Once you reach the national map on their website, simply click on the California section of the map. Choose your specific area and click on it. At the bottom of the data table, you will see a link for the CPI summary of this area. Click on this, and it will not only give you the figure you require, but it also provides an excellent chart that helps you to identify the inflation trend.
Now let us start looking at those local additional controls.
Additional Regional Rent Controls
There are currently 12 cities/districts that impose extra controls, but be aware that these could be amended at any point. Plus, new controls in new areas could just as easily be added at any time. To keep yourself up to date with any changes, you should search your local area’s official websites.
As of today, this is a list of all the current additional local rent laws. I started by listing the most southern cities/districts first before moving to the north.
The desert resort city is restricted to only allowing for a 75% increase in the CPI. That means that landlords can only factor in a maximum of a 3.75% increase for CPI in addition to a 5% general increase. A possible small win for the tenant here.
LA has set its maximum rate at an 8% increase. However, this can rise to 10% if a new tenant moves in. It is an interesting law that frankly seems to leave the existing tenants at more of a disadvantage. That’s because a landlord could easily kick them out and bring in new tenants just to score a better rental income. A crazy law that can surely only harm renters.
This popular resort town mirrors Palm Springs by only allowing a 75% maximum increase based on the CPI.
The historic LA suburb caps the increase to either 8% or to the total increase in the CPI. More interesting is that buildings constructed before 20 September 1978 that contain two units or more with a rent of $600 or less are subject to special rental controls. If your rent is at this level, consider yourself as having won the lottery.
Much like Palm Springs, West Hollywood also restricts rental increases to 75% of the CPI.
The town of Los Gatos allows an increase of 70% of the CPI, or a 5% rise, whichever is greater.
The home of eBay and Cisco only allows for a 5% increase with no allowance for an increase in the CPI. However, in circumstances where the tenant voluntarily leaves the property, or a legal eviction is carried out, a higher rental increase can be implemented.
East Palo Alto
This city in San Mateo County restricts rent increases to June only. They can be no more than 10%, and this figure must include all ancillary services connected to the rental property.
This San Fransisco Bay area city restricts the increase to just 5%. Additionally, any properties built before July of 1979 are subject to special rental conditions and controls.
Frisco has their own dedicated board that decides on increases. The landlords must submit a request for any changes in rent, and the board makes the ultimate decision. Frankly, this seems like a highly cumbersome mechanism.
San Fran’s sister city restricts an annual increase to 10% in any one year. Furthermore, it does not allow for more than a 30% increase in rent over any five year period. That is just 6% a year which kind of sounds reasonable, in my opinion.
This prestigious city has a special arrangement for any properties built before June 1980. They also have restrictions for increases of charges relating to things like parking, garbage disposal, and deposits.
Rental Exceptions to AB-1482
This is where things get complicated and where California rental laws and loopholes can cause things to get very expensive for would-be tenants. And very profitable for landlords and property developers. When exceptions apply, the rents can quite honestly become ridiculously high. So, what are the specific rent exceptions in California?
- Homes that were built within the last 15 years.
- Mobiles Homes.
- Schools and Dormitories.
- Single Family Homes (SFH) and condos that are not owned by a corporation or property company.
- A complex where the landlord lives on site.
- Commercial properties.
- Affordable housing.
- Properties provided by non-profit organizations.
It is quite a big list and one that you frankly need to pay attention to. That is because if you move into one of these rental properties, and your local district has no additional rent controls on its books, the rental increases could be severe. In some cases, tenants have been faced with 30% rent hikes over the previous year, that have consequently forced them to vacate their homes.
If your potential or current rental property falls into one of these categories…
The only protection you have is that the landlord must provide you with an AB-1482 exception notice. It will not stop them from pushing up your rent, but at least it will inform you of the fact that it is not beyond the realm of possibility of happening. Pay close attention if you are ever presented with such a form.
Need More Information About Living In California?
If so, check out our guides on the Largest Cities in California, the Cheapest Places to Live in California, the Cheapest Beach Towns in California, the Safest Cities in California, the Richest Cities in California, and the Most Dangerous Cities in California in 2023.
You might also like our breakdowns on Can a family of 5 live in a 2 bedroom apartment in California, Which Restaurants Accept EBT in California, How to Get a Work Permit in California, How Much Do Utilities Cost for an Average Apartment, and Can I Get a Good Apartment with Bad Credit for more useful information.
The current rental market in California is nothing short of crazy. Affordability of property has never been worse, and people without accommodation are finding it increasingly difficult to find somewhere suitable to live.
It is a difficult environment to enter. But, if you are currently looking for a place, you need to get acquainted with California’s rental laws and loopholes. Make sure you understand how the facts laid out in this article may affect you. Also, ensure that you do your due diligence and research to be completely sure of your future commitments.
Happy house/condo hunting, and I wish you all the luck in the world.