Just Like The Annual Rent Increase

In San Francisco, a lot of property renters are covered by the San Francisco Rent Ordinance which supplies lease control and simply trigger for eviction. This implies rents can only be raised by specific amounts per year and the renter can just be evicted for "simply causes." In addition, some rental units have restrictions on how much the property owner can charge the new occupant 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 just trigger needed for expulsion for many residential units not covered under the Rent Ordinance. If the system does not fall under an exemption, then it is covered. For the units covered only under California rent control, yearly rent increases are capped at 5 percent plus the expense of living increase or 10 percent, whichever is lower, for occupants who have actually occupied the unit 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 pertain to our counseling center to find out more about the Rent Ordinance or state law. Tenants who do not have rent control can have their lease increased by any amount at any time with an appropriate composed notice.


Major Components of the Rent Control Under the Rent Ordinance


- Landlords can just raise a renter's lease by a set quantity each year (tied to inflation). Landlords can also petition for other boosts. Notably, capital improvements can be gone through to the renter for an optimal increase of 10% or increased operating and maintenance costs for an optimal increase of 7%, however these lease increases should be recorded and authorized by the Rent Board before they can be enforced. The renter can request a difficulty exemption for the capital improvement and operating and upkeep passthroughs.
- Tenants can petition the Rent Board to decrease their lease if the landlord has stopped working to offer agreed upon or lawfully required services-e.g., the proprietor removes storage space, parking, washer/dryer, and so on or the property manager fails to preserve the facilities as safe and habitable (e.g. the apartment has uncorrected housing code infractions).
- Tenants can only be evicted for one of 16 "simply causes" unless the occupant shares the rental with their property manager. Most of these expulsions deal with accusations the tenant can challenge (e.g., renter is breaching 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 normally covered by rent control. The significant exceptions are:


- You live in a rental with a certificate of tenancy after June 13, 1979, with a couple of exceptions. This "new construction exemption" is the most significant exemption in San Francisco. The Assessor's database, is where you can usually discover the date your structure was built which will offer the approximate date for the certificate of tenancy. Illegal systems do not have a certificate of occupancy, so are covered under the Rent Ordinance unless exempt for other factors. Some "accessory units" frequently called in-law systems are still covered under rent control regardless of having a certificate of occupancy released 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 also still covered under lease control. However, reliable January 19, 2020, these more recent systems are no longer exempt from the remainder 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 assistance such as Section 8 vouchers are still covered by the eviction protection 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 constant occupancy.
- You reside in a dorm, health center, abbey, nunnery, etc- You reside in a single household home (see below).


Single Family Homes Including Condos Have Limited Rent Control Coverage


You normally do not have complete rent control defense if you reside in a single household home (a single family home with a prohibited in-law unit counts as a 2-unit building) or a condo and you (and your roomies) moved in on or after January 1, 1996. While these units do not normally have limits on lease increases, they do have "just trigger" eviction security (unless otherwise exempt for factors such as above), suggesting you can only be evicted for one of the simply causes unless the tenant shares the rental with their proprietor.


Exception: If you moved into a single household home which was vacant due to the fact that the previous tenant was forced out after a 60 or thirty days expulsion notice (a no-fault expulsion), then you have full rent control security. (You can learn if there was a previous expulsion by going to the Rent Board site or searching for the proprietor's name on the California Superior Court's website.)


Exception: If you moved into a single household home or apartment which had housing code violations that were mentioned and uncorrected for a minimum of 6 months before the job, then you have full lease control. You can find out the code violation status of your building at the Department of Building Inspection's website.


Exception: If you reside in a condo where the subdivider of the building still owns the condos, you have complete lease control security, unless it is the last unsold system and the subdivider lived in the system for at least a year after subdivision.


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


Commercial areas or live/work systems in which renters continue to reside in a nonresidential unit with the understanding of the property manager are covered by lease control unless exempt for other reasons. Whether the property owner actually knows that individuals live there and enables the renters to live there is what counts.


Rent Increases Under the Rent Ordinance


Tenants with rent control can only be provided lease increases based upon what the law enables. Each year, a proprietor can offer occupants an annual rent boost, which is based upon the Bay Area Consumer Price Index (i.e. inflation). Landlords can likewise pass on some expenses to occupants immediately (without needing to petition the Rent Board), including 50% of recently adopted bond procedures, increases in PG & E expenses (when paid by the proprietor), and a part of the yearly "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 tenants think they have received an unlawful rent boost (now or in the past) you must can be found in to the SFTU drop-in clinic for recommendations on submitting an Illegal Rent Increase petition at the Rent Board to get your lease overpayments refunded and your rent set .


Annual Rent Increases


The annual lease increase (file 571) can be imposed on or after the renter's "anniversary date." The rent increase can not be given quicker than 12 months from the last increase, the "anniversary date." It can be provided after, in which case that date becomes the new anniversary date. Annual increases can be "banked" by the property owner and enforced in later years.


90 Day Notice Required For Rent Increases More Than 10%
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State law (California Civil Code Section 827) requires a 90 day written notice for any rent boosts which, alone or cumulatively, raise a tenant's rent by more than 10% within a 12 month duration. Rent increases for 10% or less need an one month notification. This covers both rent controlled and non-rent controlled systems.
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Capital Improvement Rent Increases


One of the more unjustified parts of lease control is the capital enhancement passthrough. Capital improvements are enhancements for the structure, the proprietor's financial investment, which tenants primarily pay for through a passthrough. Not only can the landlord get the tenants 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 enhancements are things like new windows, a new roofing, painting of the outside of the structure, and other comparable enhancements to the residential or commercial property which add substantially to the life or worth of the residential or commercial property instead of regular upkeep. Landlords need to finish the work, petition the Rent Board and win approval of the lease increase before the expense can be handed down. Tenants can contest the boosts at the hearing on particular grounds, like that the work was never done, was not required, or was done to gentrify the building, however it is tough to stop such a passthrough in its whole. However, the renter might receive a difficulty exemption.


Once the capital enhancement has actually been paid for, then the occupant's rent goes back to what it was prior to the passthrough (plus any allowable increases in the interim); capital improvement lease boosts are not part of your "base lease," indicating the yearly increase percentage calculation does not include the capital enhancement passthrough.


Capital Improvement passthrough lease increases differ based on the size of the structure:


Tenants in Buildings with 5 or Fewer Units
Tenants in these smaller sized structures will need to pay off 100% of the cost of the capital improvement with lease increases of 5% per year until the entire amount is settled. For example, if the brand-new roof expenses $5,000 in a 2 system structure, each tenant has to pay $2,500 and will have their rent increased 5% annually up until their share ($ 2,500) has been paid.


Tenants in Buildings with 6 or More Units
Tenants in these bigger structures (where most large capital enhancements lease increases happen) have an option of either spending for half of the capital improvement (i.e. property owner pays 50%, occupant pays 50%) and then getting annual lease increases of 10% up until the capital improvement is paid off or the occupant can select to pay for 100% of the capital enhancement and get annual lease increases of 5% per year, up to optimum of 15% (or the equivalent of 3 years of rent boosts). The option in these bigger buildings can be made individually by each occupant and which one is finest will depend on aspects such as the expense of the capital enhancement, what the tenant's base lease is, and how long the tenant plans on living there.


Operating & Maintenance Rent Increases


Operating and upkeep lease increases are for increases in the property owner's cost of running the residential or commercial property. For the property owner to be able to hand down among these operating and maintenance lease increases, the increased proprietor costs must exceed the annual lease increases. Simply put, if the landlord's expenses increased 2% and the annual increase that year is 2.2%, then the proprietor would not be qualified for this lease boost. In figuring out whether a landlord can get an operating and maintenance lease boost, the expenditures are aggregated, or looked at in overall. In other words, an increase in one location (e.g. taxes) may be offset by a reduction in another area (e.g. repair work). If when all is computed the proprietor can get the operating and upkeep lease boost, the lease increase is only the amount over the yearly boost. So if the yearly increase is 2.2% and the property manager's expenses increase 3.2%, the property manager could get a 1% operating and maintenance lease increase. The tenant's rent will not increase by more than an additional 7% beyond the yearly allowable increase and the increase enters into the base lease. The occupant may receive a challenge exemption.


Effective July 15, 2018, changes to the Rent Ordinance advocated by the Tenants Union limit property managers from looking for lease boosts on existing tenants due to increases in financial obligation service and residential or commercial property tax that have resulted from a modification in ownership, and prohibit property owners from seeking rent increases due to increased management costs unless the costs are sensible and necessary.


PG&E Passthroughs


Tenants who do not spend for PG & E can have their rent increased when PG & E costs go up. PG & E passthroughs must belong to the Operating and Maintenance Passthrough process but instead became a different automatic passthrough when rent control was passed in 1979. These, too, are very unfair as occupants already spend for utility increases as part of the annual rent increase, which is based on the Consumer Price Index (CPI). Generally, if the landlord is computing the boost based upon the previous 2 calendar years, the property owner should file a petition with the Rent Board before passing on the increase to occupants. If, nevertheless, the property manager uses an earlier "base year" (as the majority of landlords do), they do not have to submit a petition with the Rent Board however should file their computation worksheet with the Board (and connect a copy to the occupant's rent increase notification). The "base year" for determining the increase is 2002 for any occupancies existing since 12/31/2003 and the year preceding the move-in date for tenancies which started after December 31, 2003. Tenants can submit a petition challenging the boost and get a hearing if they disagree with the property manager's computations or request a hardship exemption.


Hardship Exemption


The Tenant Financial Hardship Application (readily available from the Rent Board in numerous languages) can be submitted at any time after receipt of the notice of rent boost or the decision from the Rent Board is released, whichever is previously, for petitions for capital enhancement passthroughs, basic bond passthroughs (reliable 12/6/19), water profits bond passthroughs, energy passthroughs, and operating and maintenance expense boosts. The occupant need not pay the approved lease increase while the appeal is being processed and thought about.
Each tenant in the system who is at least 18 years old, except for subtenants, must submit documents under penalty of perjury that the authorized lease increase will make up a financial hardship for among the following reasons:


1. Tenant is a recipient of means-tested public assistance. Or
2. (a) Gross home earnings (this would include all roomies) is less than 80% of the current Unadjusted Area Median Income as released by the U.S. Department of Housing and Urban Development for the "Metro Fair Market Rent Area" that consists of San Francisco (income limits on the Rent Board kind). And
( b) Rent is greater than 33% of gross household income. And
( c) Assets, excluding pension and non-liquid possessions (such as autos, furniture, etc), do not exceed property quantities allowed by the Mayor's Office of Housing when figuring out eligibility for listed below market rate home ownership (property limitations on Rent Board kind). Or
3. Exceptional situations exist, such as extreme medical bills.


Rent Board Fee


The Rent Board is funded by a yearly cost examined on rental units covered by lease control. Landlords can pass on to occupants 50% of the cost. Just like the annual lease increase, the Rent Board Fee (file 573) can be banked. Landlords can deduct the Rent Board cost from down payment interest or expense tenants directly. Tenants can not be kicked out for nonpayment of the Rent Board charge.