California is a popular destination in the U.S., thanks to its breathtaking national parks, abundant surf culture, and sprawling wine country. Young professionals flock to the Golden State due to its promising business opportunities, diverse culture, and incredible cities.
But California has become one of the most expensive states to live in, with renting costs rising steadily over the last two decades.
According to real estate website Redfin, asking rents nationwide are up 15.2% from a year ago as of January 2022. In California, areas like Oakland (18.8%), San Diego (16.1%), and San Francisco (18.8%) have higher asking rents than the national figure.
While rent in the Golden State increased in every major metro, it’s also rising quickly in what are typically less expensive inland metros, such as Riverside (18.5%) and Sacramento (24%).
California implemented a new law for rent caps on Jan 1, 2020, and it's a good thing – because, without it, rent in California would be increasing at an astronomical and unsustainable pace.
But, rent increases are coming. So, how can you prepare for rent increases in California?
Here’s what we’ll cover:
In 2020, California passed the Tenant Protection Act of 2019 (TPA). It’s also known by its government name, AB 1482. The statewide law was meant to stop landlords from raising rents too much because of rising poverty rates, housing shortages, and the number of homeless people.
The new law limits rent increments to a maximum of 5% per year. Then it takes into account the percentage change in the cost of living (determined by the regional Consumer Price Index or inflation) to a maximum of 10% per year.
Cities with existing rent control laws, such as Los Angeles and San Francisco, will keep their existing rules — the new California law won’t override them. Instead, the statewide rent control law will extend its protection to units and houses that aren’t subject to any rent control rules.
The law will also apply if the property you rent is at least 15 years old. In 2022, the legislation covers properties constructed in 2007 and before. So, if you’re in an area with new rental housing units (like Riverside or parts of Sacramento), your property might not be subject to rent caps since units 15 years and below are exempt from the law.
Still a little confused? Don’t worry, we’ll break it down further.
Landlords are only allowed to raise the rent twice over 12 months, subject to the rent cap. Don’t forget that they cannot evict you without due process.
In California, rent increases are now limited to 5% plus any changes in the CPI up to 10% a year. That has been the case since 2019, however, due to the state’s rising inflation this year you should expect large hikes in 2022. The good news is that you still have that 10% cap protecting you.
The Tenant Protection Act allows for a maximum rent increase of 5% plus the change in the area CPI. Because the California Consumer Price Index differs by county and neighborhood, the net rent increase may change from one region to the next.
For example, if you live in an area where the CPI is 3%, the total rent increase your landlord can charge is 5% plus the 3% for CPI, which equals 8%.
In February 2022, inflation reached an all-time high because gas prices increased due to the Ukraine war. To top it off, the CPI rose by 7.9% annually, the fastest since January 1982.
As a result, when new rent caps go into effect in August 2022, they'll almost certainly be higher than last year — possibly allowing rent hikes of up to 10% in the Golden State.
You can expect a rent increase when your current lease expires. Property owners can't raise your rent in the middle of a lease; they'll need to wait until it expires.
For example, if you sign a one-year lease, you can only have annual rent increases. Likewise, if you sign a month-to-month lease, the property manager must wait until the end of the month to raise the monthly rent.
In addition, the landlord must give you at least a 30-day notice before the lease expires. If they fail to do so as required by law, you may be able to take action in a civil court.
The rent increase notice should have the following information:
The landlord should deliver the written notice directly or send it via certified mail to ensure you receive it.
Before trying any tactics, make sure the proposed rent increase is legal. For example, no rent hikes will be allowed for most LA tenants until 2023.
You can contact ACCE (a tenants’ rights organization) for information about rent increments in California since it was involved in passing AB 1482. You can also get info from your city rent control board or local attorneys specializing in landlord-tenant law.
That said, here are three ways to negotiate a rent increase:
Here’s a sample letter you can use when negotiating a rent decrease:
Dear [Landlord's name],
I'm writing to discuss lowering my [monthly/annual] rent.
I've researched rents in the area and believe a slight reduction is reasonable compared to what other tenants are paying. After examining rates for similar units in the neighborhood, I'm aware of what's realistic given the local market value.
I want to request a [dollar amount here] reduction of my [monthly/annual] rent, which is comparable to the neighborhood average. I believe that's a fair rate and would enable me to stay here, which is crucial to both of us.
In exchange for your kindness, I'd like to know if there's anything I could help you with around the property. I'm open to ideas.
I love it here, but I can save money by relocating. I'm hoping it doesn't come to that and we can agree on new terms. Please, let me know what you think as soon as possible, and thanks for your consideration.
Your Name and Signature
Apartment Address and Unit Number
Even though there’s room for negotiating a rent decrease, it won’t always be successful, and you might be forced to pay higher rents or move out. So, it might be a good idea to analyze your spending to see where you can cut costs and save.
One easy place to save is on renters insurance. With Goodcover, you can save up to 50% over legacy providers, and we return unused premiums annually through our Member Dividend. Get a Goodcover quote and start saving today.
Read the next post: How much renters insurance do I need?
Note: This post is meant for informational purposes, insurance regulation and coverage specifics vary by location and person. Check your policy for exact coverage information.
For additional questions, reach out to us – we’re happy to help.
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