As With The Annual Rent Increase

In San Francisco, many property tenants are covered by the San Francisco Rent Ordinance which supplies lease control and just trigger for eviction. This suggests leas can only be raised by certain amounts per year and the tenant can only be evicted for "just causes." In addition, some rentals have constraints on how much the proprietor can charge the new tenant due to previous evictions. The Rent Ordinance is administered by the San Francisco Rent Board.


Effective January 1, 2020, there is state lease control and simply cause required for expulsion 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, yearly rent increases are capped at 5 percent plus the expense of living increase or 10 percent, whichever is lower, for tenants who have actually occupied the unit for 12 months or more.


The Rent Board site has comprehensive information about the Rent Ordinance and you can download the San Francisco Rent Ordinance and Rent Board Rules and Regulations or pertain to our therapy center for more details about the Rent Ordinance or state law. Tenants who do not have lease control can have their rent increased by any amount at any time with an appropriate written notice.


Major Components of the Rent Control Under the Rent Ordinance


- Landlords can only raise a tenant's rent by a set amount each year (connected to inflation). Landlords can likewise petition for other increases. Notably, capital enhancements can be gone through to the tenant for a maximum increase of 10% or increased operating and maintenance costs for a maximum increase of 7%, but these lease boosts should be documented and authorized by the Rent Board before they can be enforced. The occupant can request a difficulty exemption for the capital improvement and operating and maintenance passthroughs.
- Tenants can petition the Rent Board to reduce their rent if the proprietor has stopped working to offer agreed upon or legally needed services-e.g., the proprietor removes storage area, parking, washer/dryer, etc or the proprietor stops working to keep the properties as safe and habitable (e.g. the apartment has uncorrected housing code offenses).
- Tenants can only be evicted for among 16 "just causes" unless the renter shares the rental with their property owner. The majority of these evictions deal with allegations the occupant can challenge (e.g., tenant is breaching the lease) however some are "no-fault" like owner move in or an Ellis Act eviction.


Rent Control Coverage Under the Rent Ordinance


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


- You reside in a rental with a certificate of tenancy after June 13, 1979, with a couple of exceptions. This "new building and construction exemption" is the most significant exemption in San Francisco. The Assessor's database, is where you can normally learn the date your building was constructed which will give the approximate date for the certificate of tenancy. Illegal units do not have a certificate of tenancy, so are covered under the Rent Ordinance unless exempt for other reasons. Some "accessory systems" typically called in-law units are still covered under rent control in spite of having a certificate of occupancy provided after June 13, 1979. (SF Administrative Code Section 37.2( r)( 4 )( D)) Unauthorized systems 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 recent 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 jobs. Tenants with tenant-based assistance such as Section 8 vouchers are still covered by the eviction defense of the Rent Ordinance, and in some cases covered by the rent control of the Rent Ordinance. Make a visit with the Housing Rights Committee of San Francisco for assistance for subsidized housing.
- You live in a residential hotel and have less than 32 days of continuous occupancy.
- You reside in a dorm room, hospital, 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 normally do not have complete rent control security if you live in a single family home (a single household home with an illegal in-law system counts as a 2-unit structure) or a condo and you (and your roommates) moved in on or after January 1, 1996. While these units do not usually have limitations on lease increases, they do have "just trigger" expulsion protection (unless otherwise exempt for factors such as above), suggesting you can just be evicted for among the just causes unless the occupant shares the rental with their property owner.


Exception: If you moved into a single family home which was uninhabited due to the fact that the previous tenant was kicked out after a 60 or thirty days eviction notice (a no-fault eviction), then you have full lease control protection. (You can discover 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 household home or apartment which had housing code infractions that were cited and uncorrected for at least 6 months before the vacancy, then you have complete rent control. You can discover the code violation status of your building at the Department of Building Inspection's website.


Exception: If you live in a condo where the subdivider of the building still owns the condos, you have full lease control protection, unless it is the last unsold unit and the subdivider lived in the unit for at least 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 occupants continue to reside in a nonresidential system with the knowledge of the proprietor are covered by rent control unless exempt for other factors. Whether the proprietor actually knows that individuals live there and permits the renters to live there is what counts.


Rent Increases Under the Rent Ordinance


Tenants with lease control can only be offered rent increases based upon what the law allows. Each year, a property owner can provide occupants a yearly lease increase, which is based on the Bay Area Consumer Price Index (i.e. inflation). Landlords can also hand down some costs to tenants immediately (without needing to petition the Rent Board), including 50% of recently embraced bond measures, increases in PG & E costs (when paid by the proprietor), and a portion of the yearly "Rent Board Fee" which funds the Rent Board. In addition, proprietors can petition for "capital improvement" lease boosts and "running and maintenance" lease boosts. If occupants believe they have actually received a prohibited rent increase (now or in the past) you ought to come in to the SFTU drop-in center for advice on filing an Illegal Rent Increase petition at the Rent Board to get your lease overpayments refunded and your lease set correctly.


Annual Rent Increases


The annual lease increase (file 571) can be imposed on or after the tenant's "anniversary date." The lease boost can not be given quicker than 12 months from the last boost, the "anniversary date." It can be given after, in which case that date becomes the 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 composed notification for any lease increases which, alone or cumulatively, raise an occupant's lease by more than 10% within a 12 month period. Rent increases for 10% or less need an one month notice. This covers both rent controlled and non-rent regulated units.


Capital Improvement Rent Increases


One of the more unjust parts of rent control is the capital improvement passthrough. Capital enhancements are enhancements for the structure, the proprietor's investment, which renters mainly spend for through a passthrough. Not just can the property owner get the occupants to spend for increasing the value of his or her investment, the landlord can then compose the expense of the improvements off in their taxes. Capital enhancements are things like brand-new windows, a brand-new roof, painting of the outside of the structure, and other comparable improvements to the residential or commercial property which include significantly to the life or value of the residential or commercial property rather than regular upkeep. Landlords should complete the work, petition the Rent Board and win approval of the rent increase before the expense can be handed down. Tenants can contest the boosts at the hearing on certain grounds, like that the work was never done, was not essential, or was done to gentrify the building, but it is challenging to stop such a passthrough in its entirety. However, the tenant may qualify for a hardship exemption.


Once the capital enhancement has been spent for, then the occupant's lease reverts to what it was prior to the passthrough (plus any permitted increases in the interim); capital enhancement lease boosts are not part of your "base rent," suggesting the annual increase percentage estimation does not include the capital enhancement passthrough.


Capital Improvement passthrough rent increases differ based on the size of the building:


Tenants in Buildings with 5 or Fewer Units
Tenants in these smaller sized structures will need to pay off 100% of the expense of the capital improvement with lease increases of 5% per year till the entire amount is paid off. For example, if the new roofing costs $5,000 in a 2 unit building, each renter needs to pay $2,500 and will have their rent increased 5% each year till their share ($ 2,500) has actually been paid.


Tenants in Buildings with 6 or More Units
Tenants in these larger buildings (where most large capital improvements rent boosts take place) have an option of either paying for half of the capital improvement (i.e. proprietor pays 50%, renter pays 50%) and after that getting yearly lease increases of 10% up until the capital improvement is paid off or the tenant can select to pay for 100% of the capital improvement and get yearly lease boosts of 5% annually, as much as optimum of 15% (or the equivalent of 3 years of lease boosts). The option in these larger buildings can be made individually by each occupant and which one is finest will depend upon aspects such as the cost of the capital improvement, what the tenant's base rent is, and for how long the renter intends on living there.


Operating & Maintenance Rent Increases


Operating and upkeep lease boosts are for increases in the proprietor's cost of operating the residential or commercial property. For the landlord to be able to hand down one of these operating and maintenance lease increases, the increased landlord costs need to surpass the annual lease boosts. In other words, if the property owner's expenses increased 2% and the yearly boost that year is 2.2%, then the property owner would not be eligible for this lease boost. In figuring out whether a proprietor can get an operating and maintenance lease boost, the expenses are aggregated, or took a look at in overall. In other words, a boost 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 manager can get the operating and maintenance rent boost, the lease boost is only the quantity over the annual boost. So if the annual boost is 2.2% and the landlord's costs go up 3.2%, the landlord could get a 1% operating and maintenance lease increase. The renter's lease will not increase by more than an extra 7% beyond the annual allowed increase and the increase ends up being part of the base lease. The occupant may certify for a difficulty exemption.


Effective July 15, 2018, changes to the Rent Ordinance advocated by the Tenants Union limit property managers from seeking lease increases on existing renters due to boosts in financial obligation service and residential or commercial property tax that have actually arised from a change in ownership, and restrict landlords from seeking rent boosts due to increased management expenses unless the expenses are reasonable and needed.


PG&E Passthroughs


Tenants who do not pay for PG & E can have their rent increased when PG & E expenses go up. PG & E passthroughs should be part of the Operating and Maintenance Passthrough process but instead ended up being a different automated passthrough when rent control was passed in 1979. These, too, are extremely unreasonable as tenants already pay for energy increases as part of the yearly rent boost, which is based upon the Consumer Price Index (CPI). Generally, if the proprietor is determining the boost based upon the past 2 fiscal year, the proprietor should submit a petition with the Rent Board before handing down the increase to tenants. If, nevertheless, the proprietor utilizes an earlier "base year" (as many property owners do), they do not have to file a petition with the Rent Board however need to submit their computation worksheet with the Board (and connect a copy to the occupant's lease increase notice). The "base year" for computing the boost is 2002 for any tenancies existing since 12/31/2003 and the year preceding the move-in date for tenancies which began after December 31, 2003. Tenants can submit a petition challenging the increase and get a hearing if they disagree with the landlord's computations or demand a challenge exemption.


Hardship Exemption


The Tenant Financial Hardship Application (offered from the Rent Board in multiple languages) can be filed at any time after invoice of the notification of lease boost or the choice from the Rent Board is released, whichever is previously, for petitions for capital improvement passthroughs, general bond passthroughs (reliable 12/6/19), water earnings bond passthroughs, energy passthroughs, and operating and maintenance expenditure increases. The tenant need not pay the approved rent boost while the appeal is being processed and considered.
Each tenant in the system who is at least 18 years of ages, except for subtenants, should submit documents under charge of perjury that the authorized lease increase will constitute a financial hardship for among the following factors:


1. Tenant is a recipient of means-tested public support. Or
2. (a) Gross home income (this would include all roomies) is less than 80% of the current Unadjusted Area Median Income as published by the U.S. Department of Housing and Urban Development for the "Metro Fair Market Rent Area" that includes San Francisco (income limitations on the Rent Board kind). And
( b) Rent is greater than 33% of gross home earnings. And
( c) Assets, leaving out retirement accounts and non-liquid assets (such as automobiles, furnishings, etc), do not go beyond asset amounts allowed by the Mayor's Office of Housing when identifying eligibility for below market rate own a home (possession limitations on Rent Board kind). Or
3. Exceptional scenarios exist, such as excessive medical expenses.


Rent Board Fee


The Rent Board is moneyed by a yearly fee evaluated on rental systems covered by . Landlords can pass on to tenants 50% of the charge. Similar to the annual rent boost, the Rent Board Fee (file 573) can be banked. Landlords can deduct the Rent Board cost from security deposit interest or bill tenants directly. Tenants can not be forced out for nonpayment of the Rent Board cost.