The cost of rent is increasing at an alarming rate throughout the whole country, and in some regions, it has increased by more than thirty percent. The record-high inflation that we are now witnessing has also brought about a dramatic increase in the cost of living in the state of California. However, what about the cost of rent in California? How much of an increase in rent is permitted by law in the state of California? Although it is a topic that is often asked by renters as well as landlords, there is no simple response that is appropriate in all circumstances. The simple answer is that it is dependent on the property in question as well as the location within the state of California.
California Has Skyrocketed in the Recent Years
In the next post, we will go through everything that you must have information for in order to determine the precise answer that pertains to you. Over 40 million people call the state of California home, and of those individuals, half live in rental housing. The cost of living in California has skyrocketed in recent years, making it one of the most costly states in which to reside in the United States. This is mostly due to the state’s ever-increasing rents, which have been on an upward trend for the last two decades.
Because of an ongoing housing crisis that is unable to meet the demand for housing and a shrinking number of jobs in the middle class, the state of California was compelled to pass a series of rent control laws beginning with AB-1482 to assist in maintaining affordable housing for households with low incomes and households with moderate incomes. The rent control regulations and tenant protection legislation that were implemented in California during the COVID-19 epidemic have, in the majority of cases, avoided soaring rental costs and mass evictions, which is not the case in many other states.
What is the Lowest Amount That a Landlord in California is Allowed to Increase the Monthly Rent By?
Inflation protection is one of the primary considerations that should go into a property owner’s decision to decide whether or not to raise rent charges on a yearly basis. The primary indicator of inflation is the yearly percentage change in the cost of consumer goods and services, and the Consumer Price Index is the standard indicator that is used for this purpose by the United States Bureau of Labor Statistics. Prior to the year 2021, the normal range for the annual rate of inflation in the United States is between 1 percent and around 4 percent.
In the year 2022, many tenants and landlords in the United States, including yourself, are concerned because the rate of inflation in the country has climbed to record-high levels that we have not seen since the year 1980.
Nevertheless, there are several exceptions to this legislation that controls rent. AB 1482 does not apply to some properties, which means that landlords have the authority to increase the rent by an amount that is completely at their discretion.
Which Types of Properties Are Exempt From Having Their Rents Regulated?
The Tenant Protection Act of 2019 does not apply to the following rental properties: Houses with one to four families and condos provided that neither kind of property is held by a corporation, a real estate investment trust, or a limited liability company with at least one member that is a corporation. Any kind of duplex in which the owner occupies one of the units:
- Mobile homes
- Housing for students at schools and colleges
- Commercial properties (retail stores, restaurants, etc.)
Structures that have been constructed during the previous 15 years (including accessory dwelling units)
Properties are available for rent from charitable and other non-profit organizations. Properties are available for rent that are subject to the local regulations that are already in place.
In the event that any of these circumstances apply to a rental property, the landlord is obligated to issue a notice of exemption from AB 1482 to the occupants of the property. Landlords who own homes that are exempt from the regulations governing rent control are free to raise their tenants’ monthly payments by whatever amount they deem appropriate.
However, we continue to encourage both landlords and renters to double verify the rules of their respective communities. This is because certain cities that had rent control legislation in place before AB 1482 have particular limits, and these places still have our encouragement.
In the State of California, What is the Maximum Allowable Increase in Rent That a Landlord May Make?
The answer to this inquiry is not quite straightforward since it is contingent on both the city and the county where you are situated in. According to the provisions of AB 1482, the yearly increase in rent for any rental property in the state of California that is not exempt from rent control may be no more than 5 percent plus the percentage rise in the cost of living (as measured by the Consumer Price Index) every year.
The legislators who voted on AB 1482 came to the conclusion that the percentage change in the CPI should be calculated from April 1 of the year before to April 1 of the year in question for the geographic area in which the property is situated.
This Implicates the Following Points
You need to use the Consumer Price Index for April for your metropolitan area in California in order to calculate the maximum amount landlords can increase rent in your area (5 percent plus CPI). There are different CPI indexes available for different cities and regions in the United States, and you can find these indexes on the Bureau of Labor Statistics website. You may read our comprehensive tutorial that will walk you through each step of calculating the CPI for your location by clicking on the link provided here.