Lately, our office has been hearing from many property owners who naturally want to raise the rent. Makes sense, right? Naturally, every landlord wants to increase rental income. Yet many landlords get deflated when we tell them that a rent increase in their particular situation may be illegal and the request might come back to haunt them.

Please don’t get mad at the messenger.

Before we welcome new clients aboard, we have to ascertain several details about the rental property and the occupants. As a starting point, housing providers and their legal counsel need to know what rent controls the property is subject to. Is the property covered by statewide rent control (AB 1482), or do more restrictive rules apply?

Local rent control: Many locales throughout the Bay Area cap rent increases based on a shift in the Consumer Price Index (CPI).

In San Francisco, for example, the published allowable rent increase percentage effective March 1, 2025, through February 28, 2026, is a mere 1.4%. Not nearly enough to cover the rising costs of operating a rental business.

In Oakland, their "annual" period for rent increases is August 1-July 31. But in Berkeley, it's January 1-December 31. So right now, the annual allowable rent increase in Berkeley is 2/1%, but in October, they will publish the new AGA (effective January 1), and our guess is, it will be 1.0-1.1%

Depending on where the property is located, housing properties may need to be in good graces with the city to have the license to raise rents at all, including compliance with rent registry requirements and payment of applicable business taxes.

Statewide rent control: If not overridden by more restrictive local ordinances, the statewide allowable rent increase over any 12 month period is 5% plus the local Consumer Price Index (CPI) or 10%, whichever amount is lower. With inflation on the decline, the new number in the Bay Area is 6.3% for the period of August 1, 2025, to July 31, 2026.

Rental units exempt from rent control: For those owners whose properties are exempt from local and statewide rent control, you are in an enviable position. You can raise the rents whenever you like, to whatever you like, with proper notice. We are talking about housing built within the last 15 years, single-family homes, and condominiums.

We’ll put an asterisk on this by saying that enormous rent increases should not come across as retaliatory or be viewed as a means to displace the tenant. If, for example, the rent is $2,000 and it is hiked to $10,000, the courts may view this as a “constructive eviction”, meaning that the rent increase is designed to make it so unaffordable that the tenant has no choice but to vacate.

Raising the rent to a reasonable market rate is one thing, but we do not want the optics of raising it so high that the tenant cannot possibly afford it. It's also worth noting that landlords need to be careful when there is a state of emergency is declared by state or local officials, as this will trigger anti-price gouging laws, so be sure to be aware of any natural disasters or other calamities where the property is located.

Most importantly, we need to include verbiage in the lease that clearly carves out an exemption to statewide rent control. 

If the tenant is on a fixed-term lease, we may be hamstrung. Housing providers can certainly offer a new lease to someone implanted in a 12-month term, but the tenant is not obligated to sign it because both parties are bound to the terms.

By operation of law, fixed-term leases revert to month-to-month tenancies, and that is the perfect opportunity to present a new lease with the requisite language embedded.

If the tenant refuses to sign a new lease, there is the option of changing the terms of the tenancy, and our office is well-versed in making these modifications.

Parting thoughts

There is an inclination for landlords to raise rents, but this desire must be tempered by the laws that govern rent increases. Housing providers cannot jack up the rent just because they want to.

When there is an improper rent increase, rental property owners can get immediate gratification, only to find out later that the rental income can be disgorged, especially when there is a dispute in the landlord-tenant relationship and the tenant’s attorney does a forensic accounting of the payments. And we’ll put a flaming beacon on illegal, unwarranted in-law units that can be very perilous when the tenant squawks to building inspectors and a local rent board.

Bottom line: Contact Bornstein Law whenever a rent increase is contemplated.