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How To Prepare for a Rent Increase in California

How To Prepare for a Rent Increase in California

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 0.5% from a year ago as of June 2023. And in 2022, national rent increases reached upwards of 15.2%.

In California, areas like San Jose (9.42%), San Diego (5.77%), and Los Angeles (5.05%) have higher asking rents than the national figure.

While rent in the Golden State increased in nearly every major metro, it’s also rising in what are typically less expensive inland metros, such as Riverside (1.46%).

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:

  • CA Rent Increase Law
  • How Much Can Landlords Raise Rent in California?
  • How To Calculate Your Total Allowable Rent Increase in California
  • When To Expect a Rent Increase
  • How To Negotiate a Rent Increase
  • Final Thoughts: Preparing for Your Next Rent Increase in California

CA Rent Increase Law

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.

CA rent increase law.

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 2023, 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.

How Much Can Landlords Raise Rent in California?

Landlords are only allowed to raise the rent twice over 12 months, subject to the rent cap. Don’t forget, 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 in 2023 you should expect rent hikes (maximum 10%) in booming metropolitan areas like Los Angeles, Oakland, and San Jose. In areas like San Francisco, Redding, Modesto, and Sacramento, rent has cooled, beginning to decrease year-over-year by 1% to 15%.

How To Calculate Your Total Allowable Rent Increase in California

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 June 2023, inflation is cooling, reaching a modest 3% increase year over year. That may help stop rapid rent increases in hot metro areas, and potentially even decrease rents in lower-demand areas.

Additionally, booming metro areas in California have begun implementing steeper caps, as rent is increasing. For example, in Oakland, the new annual CPI rent increase will be 2.5% (effective August 1st, 2023).

As a result, when new rent caps go into effect in August 2023, they're likely to be lower than last year's increases — but rent hikes of up to 10% could still exist in the Golden State. So, it's best to prepare and plan for the maximum increase this year.

When To Expect a Rent Increase

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:

  • Date of letter
  • Name of the tenant
  • Name of the landlord
  • Current rental rate
  • New rental rates
  • The date you must sign a new lease or plan to vacate the premises
  • Date the new rates will take effect

The landlord should deliver the written notice directly or send it via certified mail to ensure you receive it.

How To Negotiate a Rent Increase

Before trying any tactics, make sure the proposed rent increase is legal. For example, different cities have different renting laws. In Los Angeles, your annual increase can’t be above the CPI index.

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:

  • When your current lease is up, examine other rental markets and show the landlord why you should get a rent decrease. Get 1–3 examples of local apartments with better amenities offering a lower price. It will make the landlord take your request more seriously.
  • Offer your services or skills for a rent discount. For example, if you work in IT, you can offer your computer expertise to a common area. Or, if you live in a house-apartment, you can take over the lawn care for a discount.
  • You can band together with other renters whose leases are up for renewal and send a joint letter to the landlord to decrease the rent hike. That'll give you more leverage since replacing a group of tenants is more costly than just one.

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.

Thank you,

Your Name and Signature

Apartment Address and Unit Number

Phone Number

Email Address

Final Thoughts: Preparing for Your Next Rent Increase in California

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 enjoy transparent insurance that offers protection from spending your entire savings to get back on track if you're victim to a covered peril. Get a Goodcover quote and make the switch to modern, transparent renters insurance.

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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