I will ensure that all rent increases are legal, proper, and will not have any residual liability.

Housing providers should take care to ensure that rent increases comply with applicable state and local laws and are implemented in a legally defensible manner.

Raising rent in California is no longer a simple business decision. Between statewide rent caps, local rent control ordinances, and expanded tenant protections, many rent increases that seem reasonable are actually illegal. Like most other instances when housing providers make errors that come back to bite them, illegal increases are not usually made by predatory landlords looking to displace tenants, but instead, by good people who are simply ignorant of the law.

Yet getting rent increases wrong can lead to refunds, penalties, lawsuits, and serious problems in eviction court, especially when the tenant is represented by an attorney (often provided to them at no charge). Even if tenants’ attorneys are not particularly good litigators, they are adept at identifying mistakes. After reviewing a forensic history of the tenancy, opposing counsel will find improper rent increases like a heat-seeking missile.

When it comes to raising rents, housing providers have a lot of rope to hang themselves. Here are some common mistakes to avoid:

Lacking the credentials to raise rents at all.

If landlords are not in good graces with the city where the property is located, they forfeit their ability to raise rents. In San Francisco, for example, housing providers must get a Rent Increase License from the Rent Board by first registering their rental units to legally impose annual rent hikes or use banked increases. Failure to register renders rent increases void.

In Oakland, meanwhile, owners are required to provide a copy of a current Business Tax Certificate with any rent increase notices. Landlords endeavoring to raise rents based on changes to the Consumer Price Index (CPI) who are late on their business taxes will be required to pay up or provide a copy of a payment plan with the City for delinquent taxes (due April 30th). In some dampening news, significant changes are coming on January 1, 2026, limiting banking to five years and preventing transfer upon property sale.

Before 2026, owners could bank increases for up to 10 years, but the new rules cap this at 5 years and reset banked amounts when a building is sold, making it harder to accumulate large retroactive increases. Transferring banked rent increases to new property owners is allowable through an inheritance between spouses or between parents and siblings, children, or stepchildren, if that transferee owns the property for at least one year.

Berkeley’s Annual General Adjustment (AGA) allows landlords of most units fully covered by Berkeley’s Rent Ordinance to raise the rent by a set percentage with proper notice. Yet no matter when a tenancy started, a landlord cannot take the AGA if:

  • The landlord has not fully paid the Rent Board registration fees.

  • There is an order from the Rent Board denying AGAs (generally due to a decrease in services or substandard conditions).

  • There are serious repair problems or outstanding housing code violations.

  • The landlord has failed to pay interest on the security deposit for the unit.

 

California’s Statewide Rent Cap: The Starting Point.

The Tenant Protection Act of 2019 (AB 1482) is a statewide law limiting annual rent increases to the tune of 5% + CPI or 10%, whichever is lower. For rent increases that take/took effect between August 1, 2025, and July 31, 2026, this translates to an allowable annual rent increase of 6.3% throughout the Bay Area. If a rent increase exceeds this limit—even by a small amount—it is illegal.

A lawful increase becomes illegal if notice requirements aren’t followed:

  • 30 days’ written notice for increases of 10% or less

  • 90 days’ written notice for increases over 10%

When mailing the notice, however, these periods are extended by five days. For instance, when the rent increase is 10% or less, the standard 30-day notice period is extended to 35 days. For rent hikes of more than 10%, the standard 90-day notice becomes 95 days.

Exemptions to statewide rent caps:

  • New Construction: Buildings with a certificate of occupancy issued within the last 15 years (this is a rolling exemption).

  • Single-Family Homes & Condos: Exempt if owned by an individual (not a corporation, LLC with a corporate member, or REIT) and the owner provides written notice to the tenant that the property isn't covered by AB 1482.

  • Owner-Occupied Duplexes: If the owner lives in one unit while the tenant lives in the other, for the entire tenancy.

 

To claim an exemption to AB1482, housing providers must provide specific written notice to tenants stating that the property isn’t subject to state rent caps or “just cause” eviction rules. Failing to give this required notice at lease signing or renewal can nonetheless make the property subject to the state law.

 Notice of Exemption from AB 1482 for Single Family Homes and Condos: YOU ARE HEREBY NOTIFIED IN ACCORDANCE WITH CIVIL CODE 1946.2 that this property is not subject to the rent limits imposed by §1947.12 of the Civil Code and is not subject to the just cause requirements of §1946.2 of the California Civil Code. This property meets the requirements of §1947.12 (d)(5) and §1946.2 (e)(8) of the Civil Code and Owner is not any of the following (1) a real estate investment trust, as defined by §856 of the Internal Revenue Code; (2) a corporation; or (3) a limited liability company in which at least one member is a corporation. 

 

Many rent-controlled cities impose stricter rules.

We know that many owners of properties in rent-controlled jurisdictions would be ecstatic to raise rents 6.3%, but for many locales, this is too generous. In San Francisco, the allowable rate for rent-controlled units is set at 1.4% from March 2025 through February 20026. As of the date of this writing, Oakland landlords can raise the rent 1.0%, while owners of controlled units in Berkeley fare no better, with an Annual General Adjustment of a measly 1%.

Meanwhile, the costs of doing business are outpacing the incremental changes in prices paid by urban consumers for a “market basket” of consumer goods and services. Operating costs like utilities, insurance, maintenance labor, vendor services, materials, etc. continue rising at rates that outstrip abysmally low allowable rent increases under rent stabilization. Owners will enter the new year with tighter margins and fewer buffers. Strategic expense management, preventative maintenance, and clear documentation are critical to preserving long-term asset performance.

California landlords can pass through some costs to tenants, but it depends heavily on local control ordinances and petitioning local rent boards. Bornstein Law is well-versed on local rules and find ourselves on the Rent Board circuit quite often.

When rent increases appear retaliatory. 

Far too often, landlords raise rent to punish a tenant for exercising a legal right, like complaining about unsafe conditions, joining a tenant unit, reporting code violations, and other acts that are not endearing to the landlord.

When tenants assert their lawful rights, we cannot create the optics that a rent increase is punitive and does not serve a legitimate business purpose. For that matter, housing providers cannot reduce services, harass, or attempt to evict a tenant to get back at them for some grievance.

If the rent increase is discriminatory.

Any rent increase based on a protected characteristic—such as race, family status, disability, or source of income—is illegal under fair housing laws. Examples might include charging a black family significantly more for rent than white tenants in similar units, or charging a single parent more because they have children.

The key term is reasonable. If the rent is $1,800 a month and the landlord raises it to $10,000, that seems a little fishy.

Raising rents precipitously during declared emergencies.

Emergency proclamations automatically trigger Penal Code Section 396, California’s anti-price gouging law. This makes it illegal to increase the price of many consumer goods and services – including rental housing – by more than 10% above pre-emergency levels. This cap applies to both existing tenants and at unit turnover.

California's Attorney General's Office has stated in no uncertain terms that price-gouging restrictions may extend beyond the counties named in the proclamation if consumer demand surges elsewhere in the aftermath of a disaster. Throw a dart on the map at any given time, and chances are, there is a disaster somewhere. It's unclear how an oil spill in the Pacific or a bridge collapse has any impact on housing prices, but we'll have to put a finger on where states of emergency exist and for how long.

Parting thoughts

The natural inclination of housing providers is to raise rents, but we have to do so compliantly. Rent increases are governed by a complex combination of statewide statutes, local rent control ordinances, and procedural requirements that must be followed to the letter.

Habitability issues are a paramount concern for landlords in 2026 and are intertwined with rent increases because housing providers are hard-pressed to raise rents when there are underlying issues with the property.

Rent increases in California are governed by a complex combination of statewide statutes, local rent control ordinances, and procedural requirements. Increases that appear modest or reasonable may nonetheless be unlawful if a property is not properly registered, required notices are not given, local limitations apply, or exemptions are not correctly documented.

Because errors in rent increases can result in refunds, penalties, litigation exposure, and challenges in eviction proceedings, housing providers should approach rent adjustments cautiously and verify compliance with all applicable state and local rules. Careful documentation, attention to notice requirements, and an understanding of jurisdiction-specific restrictions are essential to reducing risk when adjusting rents.