Rent Control

Annual Allowable Rent Increase
March 1, 2015 –  February 29, 2016 = 1.9%

In San Francisco, most tenants are covered by rent control. This means rents can only be raised by certain amounts per year. Tenants who do not have rent control can have their rent increased by any amount at any time with proper 30 or 60 day notice.

Rent control is administered by the SF Rent Board, 25 Van Ness Ave. (at Market). The Rent Board has extensive information, including the full rent control rules and regulations.

Major Components of Rent Control

Landlords can only raise a tenant’s rent by a set amount each year (tied to inflation—see chart below). Landlords can also petition for other increases (notably capital improvements for a maximum increase of 10% or increased operating & maintenance costs for a maximum increase of 7%; these rent increases must be documented and justified and approved by the Rent Board before they can be imposed).

Tenants can petition the Rent Board to decrease their rent if the landlord is failing to provide agreed upon or legally required services—e.g., the landlord takes away storage space, parking, washer/dryer, etc. or the landlord fails to maintain the premises as safe and habitable (e.g. the apartment has uncorrected housing code violation.

Tenants can only be evicted for one of 16 “just causes.” Most of these deal with allegations the tenant can dispute (e.g., tenant is violating the lease), but some are “no-fault” like owner move-in or Ellis Act evictions. Read more on evictions here.

Rent Control Coverage

San Francisco’s rent control law covers most rental property in San Francisco.

However, you are not covered by rent control if one of the following applies to you.

You live in a building constructed after June of 1979. This “new construction exemption” is the biggest exemption in SF and cannot be changed.

 Find where you live in the Assessor’s database. You can usually find out the date your building was constructed

You live in subsidized housing, such as HUD housing projects.

You live in a dormitory, monastery, nunnery, etc.

You live in a residential hotel and have less than 28 days of continuous tenancy.

Units With Limited Rent Control Coverage

Single Family Homes/Condos—You do not have full rent control protection if you live in a single family home (note that a single family home with an illegal in-law unit counts as a 2 unit building) or a condominium and you (and your roommates) moved in on or after January 1, 1996. While these units do not have limits on rent increases, they do have “just cause” eviction protection, meaning you can only be evicted for one of 14 just causes.

Exception: If you moved into a single family home which was vacant because the previous tenant was evicted pursuant to a 30 day notice (e.g., owner move in or Ellis), then you have full rent control protection. (You can find out if there was a previous eviction by going to the Rent Board

Exception: If you moved into a single family home or condo which, when you moved in, had housing code violations uncorrected for 60 or more days, then you have full rent control. (You can find out the code violation status of your building here or by going to Department of Building Inspection at 1660 Mission).

Exception: If you live in a condo where the sub-divider of the building still owns the condos, you have full rent control protection.

Some Units Have Full Protection But Many Tenants Don’t Realize It

Illegal units, such as in-law apartments, are covered by rent control.

Commercial Spaces and Live/Work units, in which tenants reside in a nonresidential unit with the knowledge of the landlord are covered by rent control (even if the rental agreement says “commercial only,” whether the landlord actually knows that people live there is what counts)

2-4 unit, landlord occupied buildings used to be exempt from rent control. Pursuant to 1994’s Proposition I, these buildings have had full rent control protection since May 1, 1994.

Rent Increases

Tenants with rent control can only be given rent increases based on what the law allows. Each year, a landlord can give tenants an annual rent increase, which is based on the Bay Area Consumer Price Index (i.e. inflation). That amount changes each year. Landlords can also pass on some costs to tenants automatically (without having to petition the Rent Board), including 50% of recently adopted bond measures, increases in PG & E costs (when paid by the landlord), and a portion of the annual “Rent Board Fee” which funds the SF Rent Board, In addition, landlords can petition for “Capital Improvement” rent increases and “Operating & Maintenance” rent increases. If tenants believe they have received an illegal rent increase (now or in the past) you should come in to the SFTU drop-in clinic and you can file a Wrongful Rent Increase petition at the Rent Board to get your rent overpayments refunded and your rent set correctly.

Annual Rent Increases

The annual rent increase can be imposed on or after the tenant’s “anniversary date.” The rent increase cannot be given sooner than 12 months from the last increase (the “anniversary date.” It can be given after, in which case that date becomes the new anniversary date. Annual increases can be “banked” by the landlord and imposed in later years. (For elaboration on this see your Tenants Rights Handbook or come in and talk to a counselor)

Below are the annual rent increases for past years (see a PDF from the Rent Board here):

March 1, 2015-February 29, 2016–1.9%
March 1, 2014-February 28, 2015–1.0%
March 1, 2013-February 28, 2014–1.9%
March 1, 2012-February 28, 2013–1.9%
March 1, 2011-February 29, 2012—0.5%
March 1, 2010-February 28,2011—0.1%
March 1, 2009-February 28, 2010—2.2%
March 1, 2008-February 28, 2009—2%
March 1, 2007-February 28, 2008—1.6%
March 1, 2006-February 28, 2007—1.7%
March 1, 2005-February 28, 2006—1.2%
March 1, 2004-February 28, 2005—0.6%
March 1, 2003-February 29, 2004—0.8%
March 1, 2002-February 28, 2003—2.7%
March 1, 2001-February 28, 2002—2.8%
March 1, 2000-February 28, 2001— 2.9%
March 1, 1999-February 29, 2000—1.7%
March 1, 1998-February 28, 1999—2.2%
March 1, 1997-February 28, 1998—1.8%
March 1, 1996-February 28, 1997—1.0%
March 1, 1995-February 29, 1996—1.1%
March 1, 1994-February 28, 1995—1.3%
March 1, 1993-February 28, 1994—1.9%
Dec 8, 1992-February 28, 1993—1.6%
1992’s Proposition H took effect on 12/8/92, eliminating the guaranteed 4% increase
March 1, 1992-Dec 7, 1992—4%
From March 1, 1984 to March 1, 1992, the annual increase was 4%
From April 1, 1982 to February 29, 1984, the annual increase was 7%

60 Day Notice Required For Rent Increases Higher Than 10%

Effective 1/1/01, state law (Cal Civil Code 827) requires a 60 day notice for any rent increases which, alone or cumulatively, raise a tenant’s rent by more than 10% within a 12 month period. This covers both rent controlled and non-rent controlled units.

Capital Improvement Rent Increases

One of the more unjust parts of rent control is the Capital Improvement Pass-through. Capital Improvements are improvements of the building–the landlord’s investment–which tenants mostly pay for. Not only can the landlord get the tenants to pay for increasing the value of his investment, the landlord can then write the cost of the improvements off in their taxes. That said, here is a brief summary of a complex area (for more information you’ll need the Tenants Rights Handbook or to talk to a counselor at our drop in clinic. Capital improvements are things like new windows, a new roof, painting of the exterior of the building, landscaping, new appliances (ranging from refrigerators to a new heating system) and other similar improvements to the property which generally are additions or replacements as opposed to repairs. Landlords must complete the work and petition the Rent Board and win approval of the rent increase before the can be passed on. Tenants can contest the increases at the hearing on certain grounds, like that the work was never done or was not necessary or was done to gentrify the building, but it is difficult to stop such a pass-through in its entirety.

Capital Improvement pass-through rent increases differ based on the size of the building: Tenants in buildings with 5 or fewer units will have to pay off 100% of the cost of the capital improvement with rent increases of 5% per year until the entire amount is paid off (e.g. if the new roof costs $5,000 in a 2 unit building, each tenant has to pay $2,500 and will have their rent increased 5% per year until their share ($2,500) has been paid for. Tenants in buildings with 6 or more units (where most large capital improvements rent increases happen) have a choice of either paying for half of the capital improvement (i.e. landlord pays 50%, tenant pays 50%) and then getting annual rent increases of 10% until the capital improvement is paid off or the tenant can choose to pay for 100% of the capital improvement and get annual rent increases of 5% per year, up to maximum of 15% (or 3 years’ worth of rent increases).

The choice in these larger buildings can be made individually by each tenant and which one is best will depend on factors such as the cost of the capital improvement, what the tenant’s base rent is, and how long the tenant plans on living there. Again, if you have one of these rent increases you are best off coming in to the Tenants Union and/or joining and getting the handbook which has many pages on this topic. Once the capital improvement has been paid for, then the tenant’s rent reverts to what it was prior to the pass-through (plus any annual increases in the interim); capital improvement rent increases are not part of your “base rent,” meaning the annual increase percentage calculation does not include the capital improvement pass-through.

Operating & Maintenance Pass-throughs

Operating & Maintenance pass-throughs are for increases in the landlord’s cost of operating the property and for the landlord to be able to pass on one of these O & M pass-throughs, the increased landlord expenses must exceed the annual rent increases.

In other words, if the landlord’s expenses increased 2% and the annual increase that year is 2.2%, then the landlord would not be eligible for this pass-through. In determining whether or not a landlord can get an O & M increase, their expenses are aggregated, or looked at in total. In other words, an increase in one area (e.g. taxes) may be offset by a decrease in another area (e.g. repairs). If when all is calculated the landlord can get the O & M increase, the pass-through is only the amount over the annual increase. So if the annual increase is 2.2% and the landlord’s expenses go up 3.2%, the landlord could get a 1% O & M increase. O & M rent increases cannot exceed 7% and do become a part of the tenant’s “base rent.” O & M increases typically only occur when the landlord has a big increase in one expense area, most commonly a new, higher, mortgage.

PG&E Pass-throughs

Tenants who do not pay for PG&E separately (i.e., it’s included in the rent), can have their rent increased when PG&E costs go up. PG&E pass-through should be part of the O & M pass-through process but instead became a separate automatic pass-through when rent control was passed in 1979. These, too, are very unfair as tenants already pay for utility increases as part of the annual rent increase, which is based on the Consumer Price Index (CPI) Energy costs are typically the single, biggest component of the CPI and when gas & electricity prices go up or down the annual increases will increase or decrease dramatically. But landlords get to collect twice from tenants and can pass on these costs again via the PG&E Pass-through.

The Rent Board has lengthy, complicated regulations on how these pass-throughs are calculated. Generally, if the landlord is calculating the increase based on the past 2 calendar years, the landlord must file a petition with the Rent Board before passing on the increase to tenants. If, however, the landlord uses an earlier “base year” (as most landlords do) they do not have to file a petition with the Rent Board but must file their calculation worksheet with the Board (and attach a copy to the tenant’s rent increase notice). The “base year” for calculating the increase is 2002 for any tenancies existing as of 12/31/2003 and the year preceding the move-in date for tenancies which began after 12/31/2003. Tenants can file a petition challenging the increase and get a hearing if they disagree with the landlord’s calculations.

Rent Board Fee

The Rent Board is funded by an annual fee assessed on rental units covered by rent control. Landlords can pass on to tenants 50% of the fee. Currently the fee is $29 per apartment unit and $14.50 per residential hotel unit, thus landlords can pass on $14.50 per year to apartment tenants and $7.25 per year to hotel tenants. As with the annual rent increase, the Rent Board Fee can be banked. Click here for past amounts of the fee. Landlords can deduct the Rent Board fee from Security Deposit interest or bill tenants directly. Tenants cannot be evicted for non-payment of the Rent Board fee.

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