With inflation on the rise and costs increasing ever still, landlords worry that those rising costs will outpace rental income profit.
Now, more than ever, it’s important to know how much you can increase rent each year to meet those growing costs.
So, let’s not waste any time.
How much can you raise rent in California in 2023?
And what should you know about rent control in California?
Let’s start with the main question and work our way down:
Raising rent in California
In California, according to AB 1482, you can raise rent:
- By 5% + the percentage change CPI (consumer price index)
- Every 12 months
Landlords are allowed to raise rent by a maximum of 10% every 12 months.
That means if the CPI change is above 5%, the maximum increase caps at 10%.
It’s vital to understand, however, that the actual amount you can raise rent depends largely on your local city laws.
Your local laws can vary about as much as differing states can, as they have the ability to overlay their own laws on top of state policies.
For example, take a look at the difference between L.A. and Inglewood, which sits right next to it:
Let’s dive into the rent control law that governs much of California: AB 1482.
Particularly, let’s see who it applies to and who is exempt to better understand how much you’re allowed to raise rent on your specific property.
What is AB 1482?
AB 1482, or the Tenant Protection Act of 2019, states that California municipalities may not increase rent by more than 5% plus the percentage increase in CPI during any 12-month period, at a maximum of 10%.
Until recently, the CPI increase in many areas of California was 3-4.5%.
However, also stated within the policy was that after August 1st of 2022, due to inflation the maximum allowable CPI increase would be set to 5%.
That means many areas just went anywhere from 7-9.5% on average to the full 10% increase.
Who does AB 1482 apply to?
AB 1482 applies to apartment complexes which were built before 2007 as well as those not subject to local municipal rent control laws.
AB 1482 exemptions
AB 1482 also has a number of exemptions. That includes:
- Commercial properties
- Duplexes where the owner lives in one of the two units
- Single-family units not owned by a group such as an LLC, REIT, or corporation of any kind
- Mobile homes
Most notably exempt are buildings built within the past 15 years.
Also, rental properties provided by non-profits or which are subject to local ordinances are also exempt.
So far, we’ve talked about standard longer-term legislation.
However, there’s also another layer you need to take into consideration to make sure you’re being compliant with state and local laws.
That’s tenant eviction protections and emergency bans.
While most cities and counties COVID-era protections have expired, some are still in place.
So, it’s important to make sure you’re following any rent protection-related policy currently in place and to know when it will expire.
Fortunately, finding that information is pretty easy.
For a great guide detailing up-to-date information on emergency ordinances and tenant protections still in place for every California municipality, see: COVID-19, California Eviction Moratoriums (Bans) and Tenant Protections.
Rent control laws
If after reading the above you’re having trouble finding your municipalities specific rent control laws, not to worry.
In fact, it’s generally safer to use this route as you’ll be verifying the information with local authorities to ensure you have the most accurate and up-to-date information.
Here’s how to find your city or county’s current rent control laws:
1. Find out what existing rent control legislation your state has in place from your official municipal (.org) website
You can find this by searching, “does my [city/county] have rent control laws”.
Preferably, you find what your city’s official .org website is and add that to the end of the search query to get results from that website.
Or, better yet, use: “site:[url] does my [city/county] have rent control laws”
By using “site:” then the URL, you’ll only get listings from that website, making the process of searching for your state’s official page on the topic faster.
You can use the search function of your state’s official site, but it likely won’t be faster.
Most website’s search bars don’t work as well as Google and bring up unrelated results, so it’s generally faster to do it this way.
2. Get your city or county contact information and reach out to find out about any protections or freezes in place
Reach out personally and ask if there are any price protections or rent freezes in place.
3. Find the CPI of your area
Knowing the CPI of your area is critical because it’s a part of the rent increase calculation for most areas.
Fortunately, you don’t have to calculate this yourself.
To find the CPI of your area, head to the U.S. Bureau of Labor Statistics and select CA then your county:
Next, you should find a document at the top of the page labeled “ConsumerPriceIndex”.
Once you have your CPI, you can plug it into your location’s calculation to find how much you can increase rent.
The more you know about your local state and municipal rent laws and protections, the better equipped you’ll be to maximize your rental income through regular rent increases.
It can be a bit complex having to look into:
- State laws
- Municipal laws
- And emergency/tenant protections
But once you have that information in hand, you’re good to go.
These types of laws do change, however, so make sure to follow the DoorLoop blog to get the most up-to-date information on rent control laws and regulations to make the most of your entire portfolio.
And while you’re at it, check out some of our other comprehensive guides and resources for landlords and property managers: