Rent increases
How much can you raise the rent? That's only the first question. The rules governing the property, the structure of the tenancy and the economics of the increase can all affect what a housing provider should do next.
Before calculating the increase, understand the tenancy.
There is no single allowable rent increase for every California rental property. The analysis begins with the property, the tenancy and the rules governing both.
Location, property characteristics and applicable exemptions can determine whether state or local rent restrictions apply. But the analysis does not end with an allowable percentage.
What the tenant pays for, prior increases, notice requirements, banked increases and other circumstances can all affect how a rent increase should be approached. And even when an increase is legally permissible, the economics of the tenancy may influence whether it makes sense.
Which rent rules apply?
Start with the address. Depending on the property, a rent increase may be governed by California's statewide rent cap, a local rent-control ordinance, or neither.
The type and age of the property can matter too. Before calculating an increase, determine which regulatory framework applies, whether the property qualifies for an exemption, and whether local rules impose additional limits or requirements.
What does the tenant actually pay for?
Rent may include more than the amount identified as monthly base rent. Parking, storage, utilities and other fees, services or amenities can become part of the rent analysis, particularly under local rent-control rules.
Review the lease and the history of the tenancy before changing any charge. Simply separating a fee from the monthly rent does not necessarily mean it can be increased independently or removed without consequence.
How much notice does the tenant get?
The amount of the increase can affect how much advance notice is required, and local rules may add requirements of their own.
Getting the number right is only half the job — the increase also has to be implemented correctly.
What notice is required?
Even when the amount of a rent increase is lawful, the increase must still be implemented properly. The size of the increase can affect how much advance notice is required, and local rules may impose additional procedures or requirements.
The notice should clearly state the new rent and effective date and be served in the manner required by law. A miscalculation or defective notice can turn an otherwise permissible increase into an avoidable dispute.
What is the tenancy worth?
The maximum lawful increase is not always the smartest increase. A reliable tenant paying slightly below market may be more valuable than a vacancy followed by months of lost rent, turnover costs and uncertainty.
Consider the economics of the tenancy — and the long-term value of keeping a good tenant — before deciding how far to raise the rent.
Is the increase retaliatory?
A rent increase should not be used to punish a tenant for exercising a legal right, such as reporting a habitability problem or making a protected complaint.
The timing and circumstances surrounding an increase can matter. Consider not only whether the amount is lawful, but why the increase is being imposed.
The address can change the answer.
A rent increase that works for one property may not work for another. Local ordinances can affect allowable increases, banking, housing services and other requirements. The analysis begins with the rules governing the particular property.
Subsidized tenancies add another layer
A housing provider participating in the Section 8 program cannot necessarily implement a rent increase simply by serving the tenant with a notice.
Proposed increases may also require review or approval by the housing authority administering the subsidy. The lease, HAP contract, program requirements and applicable state or local rent restrictions all need to be considered together.
Before increasing the rent in a subsidized tenancy, make sure the proposed amount and the process used to implement it satisfy each layer of the rental relationship.
How Bornstein Law helps
A rent increase should be both legally sound and economically sensible.
Bornstein Law helps housing providers determine which rent rules apply, calculate permissible increases, evaluate banked increases, address housing services and other charges, and prepare the notices needed to implement an increase properly.
We also help owners look beyond the allowable percentage. The value of the tenancy, the condition of the rental market and the owner's longer-term objectives can all inform whether an increase — and how much of an increase — makes business sense.
Before raising the rent, know the rules — and consider the economics.
We help housing providers determine what increase is permitted, how to implement it properly, and whether the proposed increase makes sense for the property and the tenancy.