This article was initially posted on Mar 13, 2014, and has been updated
Rent Control! Living in San Francisco, we all know at least one person who has a fantastic apartment in San Francisco and is paying less than half what everyone else is. Depending on who you read, rent control is the only way to stop property owners from fleecing their tenants or is single-handedly responsible for any housing crisis because the market isn't able to solve the housing issue its own. I'm going to try to avoid making a value judgment here, and simply discuss how rent control works in the city.
However, I am NOT an attorney, and this post is not legal advice and should be used for informational purposes only, and is specific to the city of San Francisco
First, it’s important to understand what rent control is. Rent control means landlords cannot raise rents for their buildings beyond a set amount that is tied to directly to inflation. The rate varies each. For the period March 1, 2013 – February 28, 2014, it was 1.9%. This year (March 1, 2014 - February 28, 2015) it is set at 1%. (update - recent allowable increases: March 1, 2017 through February 28, 2018 is 2.2 %. The annual allowable increase amount effective March 1, 2016 through February 28, 2017 is 1.6 %.)
There are four basic guidelines on when rent control doesn’t apply:
A building constructed after June 15, 1979 (if you are curious about the age of your building, visit the county assessor’s office by clicking here)
If you lived in subsidized or HUD housing
You live in a dormitory, monastery, hospital, nunnery, etc
You live in a residential hotel and have lived there less than 28 days.
There are specific reasons why a landlord can increase rent beyond the set amount by the rent board. These reasons include any capital improvements made to the building. “Capital improvements” include a new roof, new windows, exterior paint jobs, new appliances, etc. In buildings with 5 or fewer units, the landlord can raise the rent up to 5% per year, until they recapture 100% of the cost. In buildings with more than five units there are options, depending on a variety of factors.
In both cases, the landlord must do all the work ahead of time, and then submit request for a hearing to raise the rents. If the work was never done, tenants can appear at the hearings to contest the rent increase. Also, once the capital improvement rent increase is not permanent, and once the cost of the improvements has been recaptured, the rents must return to what they would usually be, (their standard base plus any regular rent increases).
Another reason a landlord can increase the rent beyond the rent set by rent control is higher costs in operating and maintenance. Higher costs result from an increase in the expenses for a property management company, gardener, and general care and maintenance for the property. However, before the tenants have to pick up the bill, the rate of increase must exceed the allowable increase set by the rent board. And rents cannot be increased by more than 7% for operation and maintenance reasons. Once again, these increases do not add to the overall base rent for your unit, and adjustments must happen after the landlord has incurred the additional cost.
Also, there is a practice called banking rent. Banking rent is where a landlord can go back to the original date on your lease and apply each allowable rent increase per year to bring your current rent up to what it would be if they had raised your rent consistently each year. This is entirely allowable as rent increases are not on a use it or lose it policy
I hope that this helps clear up and confusion related to rent control. If you have any questions, please reach out to us at email@example.com.