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Similar to The Annual Rent Increase

In San Francisco, a lot of domestic renters are covered by the San Francisco Rent Ordinance which provides lease control and just trigger for expulsion. This indicates rents can only be raised by particular amounts annually and the occupant can just be evicted for “simply causes.” In addition, some rental systems have limitations on just how much the proprietor can charge the new due to previous expulsions. The Rent Ordinance is administered by the San Francisco Rent Board.

Effective January 1, 2020, there is state rent control and just trigger required for eviction for lots of domestic units not covered under the Rent Ordinance. If the unit does not fall under an exemption, then it is covered. For the systems covered just under California lease control, annual lease increases are capped at 5 percent plus the expense of living increase or 10 percent, whichever is lower, for tenants who have occupied the system for 12 months or more.

The Rent Board site has comprehensive details about the Rent Ordinance and you can download the San Francisco Rent Ordinance and Rent Board Rules and Regulations or come to our therapy clinic for additional information about the Rent Ordinance or state law. Tenants who do not have lease control can have their rent increased by any quantity at any time with a correct written notification.

Major Components of the Rent Control Under the Rent Ordinance

– Landlords can just raise a renter’s lease by a set amount each year (tied to inflation). Landlords can also petition for other boosts. Notably, capital enhancements can be gone through to the renter for a maximum increase of 10% or increased operating and upkeep expenses for an optimal boost of 7%, however these rent increases should be recorded and approved by the Rent Board before they can be enforced. The occupant can ask for a hardship exemption for the capital enhancement and operating and maintenance passthroughs.
– Tenants can petition the Rent Board to decrease their rent if the proprietor has stopped working to offer agreed upon or lawfully required services-e.g., the property owner takes away storage area, parking, washer/dryer, etc or the property owner stops working to preserve the properties as safe and habitable (e.g. the home has uncorrected housing code infractions).
– Tenants can just be evicted for among 16 “just causes” unless the renter shares the rental unit with their landlord. The majority of these evictions handle accusations the tenant can dispute (e.g., occupant is breaking the lease) but some are “no-fault” like owner relocation in or an Ellis Act expulsion.

Rent Control Coverage Under the Rent Ordinance

If you live in San Francisco, you are typically covered by lease control. The major exceptions are:

– You reside in a rental with a certificate of occupancy after June 13, 1979, with a couple of exceptions. This “new building exemption” is the greatest exemption in San Francisco. The Assessor’s database, is where you can generally discover out the date your building was constructed which will give the approximate date for the certificate of tenancy. Illegal systems do not have a certificate of tenancy, so are covered under the Rent Ordinance unless exempt for other factors. Some “accessory systems” often called in-law units are still covered under rent control despite having a certificate of occupancy provided after June 13, 1979. (SF Administrative Code Section 37.2( r)( 4 )( D)) Unauthorized units that existed before June 13, 1979 and were brought up to code after that date are likewise still covered under rent control. However, effective January 19, 2020, these more current systems are no longer exempt from the rest of the Rent Ordinance due to their certificate of tenancy date.
– You reside in subsidized housing, such as HUD housing tasks. Tenants with tenant-based help such as Section 8 coupons are still covered by the expulsion protection of the Rent Ordinance, and often covered by the rent control of the Rent Ordinance. Make a visit with the Housing Rights Committee of San Francisco for help for subsidized housing.
– You live in a residential hotel and have less than 32 days of continuous occupancy.
– You live in a dormitory, medical facility, monastery, nunnery, and so on- You reside in a single household home (see listed below).

Single Family Homes Including Condos Have Limited Rent Control Coverage

You generally do not have complete rent control security if you live in a single family home (a single family home with a prohibited 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 typically have limits on lease boosts, they do have “just cause” eviction security (unless otherwise exempt for factors such as above), indicating you can just be forced out for one of the simply causes unless the renter shares the rental system with their property owner.

Exception: If you moved into a single family home which was uninhabited because the previous tenant was forced out after a 60 or one month expulsion notice (a no-fault expulsion), then you have complete lease control protection. (You can find out if there was a previous expulsion by going to the Rent Board site or looking for the property manager’s name on the California Superior Court’s site.)

Exception: If you moved into a single family home or condo which had housing code offenses that were pointed out and uncorrected for at least 6 months before the job, then you have full lease control. You can discover the code offense status of your structure at the Department of Building Inspection’s website.

Exception: If you live in a condo where the subdivider of the structure still owns the condominiums, you have full rent control security, unless it is the last unsold system and the subdivider lived in the system for a minimum of a year after neighborhood.

Commercial Units Used as Residential with the Landlord’s Knowledge Are Not Exempt from Rent Control

Commercial areas or live/work units in which tenants continue to reside in a nonresidential system with the knowledge of the property owner are covered by rent control unless exempt for other reasons. Whether the property owner really knows that individuals live there and enables the renters to live there is what counts.

Rent Increases Under the Rent Ordinance

Tenants with lease control can just be offered lease increases based on what the law permits. Each year, a proprietor can offer renters an annual rent increase, which is based upon the Bay Area Consumer Price Index (i.e. inflation). Landlords can likewise pass on some expenses to renters instantly (without needing to petition the Rent Board), including 50% of recently adopted bond steps, increases in PG & E expenses (when paid by the landlord), and a part of the annual “Rent Board Fee” which funds the Rent Board. In addition, landlords can petition for “capital enhancement” lease increases and “operating and maintenance” lease boosts. If renters believe they have gotten an unlawful lease increase (now or in the past) you need to be available in to the SFTU drop-in center for guidance on submitting an Illegal Rent Increase petition at the Rent Board to get your rent overpayments reimbursed and your rent set properly.

Annual Rent Increases

The yearly rent boost (document 571) can be imposed on or after the renter’s “anniversary date.” The rent boost can not be given sooner than 12 months from the last increase, the “anniversary date.” It can be given after, in which case that date ends up being the brand-new anniversary date. Annual increases can be “banked” by the proprietor and imposed in later years.

90 Day Notice Required For Rent Increases More Than 10%

State law (California Civil Code Section 827) needs a 90 day written notice for any rent increases which, alone or cumulatively, raise a renter’s lease by more than 10% within a 12 month period. Rent increases for 10% or less need a 30 day notice. This covers both lease regulated and non-rent controlled units.

Capital Improvement Rent Increases

Among the more unjustified parts of lease control is the capital improvement passthrough. Capital improvements are improvements for the building, the property manager’s investment, which tenants primarily spend for through a passthrough. Not only can the property owner get the renters to pay for increasing the worth of his or her financial investment, the property owner can then write the expense of the improvements off in their taxes. Capital improvements are things like new windows, a brand-new roofing system, painting of the outside of the structure, and other comparable enhancements to the residential or commercial property which add significantly to the life or worth of the residential or commercial property as opposed to routine upkeep. Landlords should finish the work, petition the Rent Board and win approval of the rent boost before the expense can be passed on. Tenants can object to the boosts at the hearing on specific grounds, like that the work was never done, was not necessary, or was done to gentrify the structure, however it is challenging to stop such a passthrough in its entirety. However, the occupant may qualify for a hardship exemption.

Once the capital enhancement has actually been spent for, then the tenant’s lease reverts to what it was prior to the passthrough (plus any allowable increases in the interim); capital improvement lease increases are not part of your “base lease,” implying the annual increase percentage calculation does not consist of the capital enhancement passthrough.

Capital Improvement passthrough rent increases differ based upon the size of the structure:

Tenants in Buildings with 5 or Fewer Units
Tenants in these smaller structures will have to pay off 100% of the expense of the capital improvement with lease boosts of 5% each year until the whole amount is settled. For instance, if the new roofing expenses $5,000 in a 2 system structure, each occupant has to pay $2,500 and will have their lease increased 5% annually until their share ($ 2,500) has been paid.

Tenants in Buildings with 6 or More Units
Tenants in these larger buildings (where most large capital improvements rent boosts occur) have a choice of either paying for half of the capital enhancement (i.e. property owner pays 50%, renter pays 50%) and then getting yearly rent boosts of 10% till the capital improvement is settled or the tenant can pick to pay for 100% of the capital enhancement and get yearly rent boosts of 5% per year, approximately maximum of 15% (or the equivalent of 3 years of rent increases). The choice in these larger buildings can be made individually by each renter and which one is best will depend upon factors such as the expense of the capital enhancement, what the tenant’s base rent is, and the length of time the occupant prepares on living there.

Operating & Maintenance Rent Increases

Operating and maintenance rent increases are for boosts in the landlord’s cost of running the residential or commercial property. For the property manager to be able to hand down one of these operating and upkeep lease boosts, the increased property manager expenditures must exceed the yearly rent increases. To put it simply, if the proprietor’s expenditures increased 2% and the yearly boost that year is 2.2%, then the property manager would not be qualified for this lease increase. In figuring out whether or not a proprietor can get an operating and upkeep lease increase, the expenditures are aggregated, or took a look at in total. Simply put, an increase in one area (e.g. taxes) might be offset by a decline in another area (e.g. repair work). If when all is calculated the property owner can get the operating and maintenance lease boost, the rent increase is only the amount over the yearly boost. So if the annual increase is 2.2% and the landlord’s costs increase 3.2%, the property owner could get a 1% operating and upkeep lease increase. The renter’s rent will not increase by more than an additional 7% beyond the annual allowed boost and the boost enters into the base rent. The renter may certify for a difficulty exemption.

Effective July 15, 2018, modifications to the Rent Ordinance advocated by the Tenants Union limit proprietors from seeking lease boosts on existing occupants due to increases in debt service and residential or commercial property tax that have actually resulted from a modification in ownership, and forbid property managers from seeking rent boosts due to increased management expenses unless the expenses are affordable and needed.

PG&E Passthroughs

Tenants who do not spend for PG & E can have their rent increased when PG & E expenses go up. PG & E passthroughs must belong to the Operating and Maintenance Passthrough process but rather became a different automatic passthrough when lease control was passed in 1979. These, too, are really unjust as renters currently pay for utility increases as part of the annual rent boost, which is based upon the Consumer Price Index (CPI). Generally, if the property manager is determining the boost based on the past 2 fiscal year, the property owner must submit a petition with the Rent Board before handing down the boost to tenants. If, nevertheless, the property manager uses an earlier “base year” (as most property managers do), they do not need to submit a petition with the Rent Board but need to file their computation worksheet with the Board (and attach a copy to the occupant’s rent boost notice). The “base year” for calculating the boost is 2002 for any tenancies existing as of 12/31/2003 and the year preceding the move-in date for occupancies which started after December 31, 2003. Tenants can file a petition challenging the increase and get a hearing if they disagree with the property manager’s computations or demand a challenge exemption.

Hardship Exemption

The Tenant Financial Hardship Application (readily available from the Rent Board in numerous languages) can be filed at any time after invoice of the notification of rent boost or the decision from the Rent Board is released, whichever is earlier, for petitions for capital improvement passthroughs, basic bond passthroughs (efficient 12/6/19), water revenue bond passthroughs, energy passthroughs, and operating and upkeep cost increases. The tenant need not pay the authorized rent increase while the appeal is being processed and considered.
Each renter in the system who is at least 18 years of ages, other than for subtenants, must send paperwork under charge of perjury that the authorized lease increase will constitute a financial hardship for one of the following factors:

1. Tenant is a recipient of means-tested public assistance. Or
2. (a) Gross family earnings (this would consist of all roommates) is less than 80% of the present Unadjusted Area Median Income as released by the U.S. Department of Housing and Urban Development for the “Metro Fair Market Rent Area” that includes San Francisco (income limits on the Rent Board form). And
( b) Rent is greater than 33% of gross home earnings. And
( c) Assets, omitting pension and non-liquid assets (such as automobiles, furniture, etc), do not go beyond property quantities permitted by the Mayor’s Office of Housing when identifying eligibility for below market rate home ownership (possession limitations on Rent Board form). Or
3. Exceptional circumstances exist, such as excessive medical expenses.

Rent Board Fee

The Rent Board is funded by a yearly cost evaluated on rental systems covered by rent control. Landlords can hand down to renters 50% of the cost. As with the annual lease boost, the Rent Board Fee (file 573) can be banked. Landlords can subtract the Rent Board cost from down payment interest or costs renters straight. Tenants can not be kicked out for nonpayment of the Rent Board charge.