Rent Increase Guidance for California Landlords
Navigating California’s cumbersome rent control and tenant protection laws can be maddening. At Bornstein Law, we help housing providers increase rents legally, strategically, and fully comply with state law and more protective local ordinances.
Our firm helps landlords understand:
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Whether the property is subject to rent control or exempt.
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How much housing providers can legally increase rents.
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How to properly serve a rent increase notice.
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Timing requirements and documentation needed to raise rent.
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Best practices to avoid tenant disputes and liability.
Thinking smartly about your real estate business.
Rent increases are not just a matter of percentages - they are a critical part of a landlord’s investment strategy. Generally speaking, we favor raising rents when it is permissible to do so. However, we have to be careful. Keep in mind some potential residue when raising rents. Here are some considerations:
Tenant’s claims of retaliation or illegal rent hikes: A tenant facing a rent increase can claim that their rent was increased illegally, or that the increase was retaliatory if there is acrimony in the rental relationship.
Reduction in services that should lead to a corresponding decrease in rent: Generally speaking, whatever amenities that tenants enjoyed when the tenancy began, they should be preserved. This can be any number of things, like parking, storage areas, use of common areas, etc. Whenever there is a reduction in perks, the tenant can make a compelling argument that rent should be lowered to reflect their loss.
Rent increases that are so high, it can only be construed as a way to drive tenants out of the unit: If the property is not subject to a rent cap, the tenant can still claim foul if the rent increase is so precipitously high it is designed to displace them. Courts have ruled that a massive rent increase can amount to a “constructive eviction.”
The value of an existing tenant: Sometimes, it may not be prudent to raise the rent that an outstanding, desirable tenant is paying. A concern we have is that the rent increase will displace a good tenant who moves out, and now the vacant unit languishes on the market for months, producing no rental income for the owner.
Proper bookkeeping: Landlords need to know their numbers and have a detailed ledger of what the tenant has paid. What we are looking for whenever a rent increase is contemplated is a forensic history of rent payments. One of the key components of managing landlord-tenant relationships is meticulous bookkeeping, so we urge our clients to get organized and consider using cloud-based solutions such as AppFolio, where all of the rent payments and other critical information are in one place.
Other issues abound whenever changing the status quo and raising rents. Contact the firm built for rental housing providers.
We probably don’t have to tell you that housing providers face scrutiny in operating their rental business. Bornstein Law can ensure that rent increases are not only legal but defensible if a tenant challenges them in court or before a local rent board.
From auditing rent histories to identify opportunities or explore, to advising on exemption claims (e.g., new construction, single-family homes), to drafting and reviewing rent increases, and handling tenant challenges, our firm can give the clarity and confidence you need to move forward.