The Name of the Game is Demand and Supply.
The increase in rental units’ demand and the decrease in the supply of rental units gave birth to rising concerns of high rental costs in California. The concerns of increasing housing prices combined with sluggish housing construction have motivated the California to implement rent control laws. Unfortunately, only a handful of cities adopted the law: Berkeley, Beverly Hills, Campbell, East Palo Alto, Fremont, Hayward, Los Angeles, Los Gatos, Oakland, Palm Springs, San Francisco, San Jose, Santa Monica, Thousand Oaks, West Hollywood. San Diego does not fall on that list.
The rent control ordinance usually controls two main factors:
- Limiting how often and how much landlords can increase rent
- Requiring owners to give an adequate reason for eviction
Rent Control Law in California Cities
1. Rent Limit
California cities have implemented rent control laws to keep rental inflation below or in line with the increase in the cost of living each year. The rental hike frequency is a set percentage once every twelve months. The cities that have adopted the price ceiling to curb the exponential growth in rental rates appear below:
|Berkeley||65% of Yearly San Francisco-area CPI Increase (effectively 2%)|
|Los Angeles||3% or Los Angeles-area Yearly CPI Increase, up to 8% (whichever is higher)|
|Palm Springs||75% of Yearly Los Angeles-area CPI Increase|
|San Francisco||60% of Yearly San Francisco-area CPI Increase|
|San Jose||8% (21% if rents have not increased in more than two years)|
|Santa Monica||75% of the Yearly Los Angeles-area CPI Increase|
|West Hollywood||75% of Yearly Los Angeles-area CPI Increase|
Source: California Apartment Association (Updated 06/05/2015)
2. Eviction Reason
Rent control laws limit evictions to 12 legitimate reasons to avert eviction abuses. These justifications fall into two categories: (1) the tenant is at fault, and (2) the tenant is not to blame.
The tenant at fault may be evicted without compensation for any of the following: non-payment of (legal) rent, breaking a term of the lease, refusal to renew the lease, causing a nuisance (including drugs and gangs), refusal to permit the landlord entry for inspection or repair, using the unit for an illegal purpose, or there is a different person in possession of the unit than who rented it.
When the tenant is not at fault, the landlord must file special paperwork with the City Housing Department and prove the reason is valid. These reasons may include: the owner or owner’s family is moving into that unit, they will no longer rent out the property, the owner is selling the property, or the property is condemned. In these cases, the landlord must compensate the tenant with $3,300 relocation assistance (or $8,200 if the tenant has minor children, a legal disability, or is over 62 years old; new amounts effective 7/1/05)
Impact on San Diego
Since San Diego has not yet adopted the rent control rules, tenants are facing large rate hike issues, approx. 8.4% in a year. Meanwhile, the rental unit supply has steeply fallen over time due to massive construction regulations that limit investors from developing barren lands. This imbalance in demand and supply has landed a lot of tenants in trouble:
Landlords make full use of this opportunity and increase property rate MOM. Thus, the average rental rate in San Diego has increased to $1940 per month. This number is up about $70 from last year (as per database reports). Today, a majority of tenants contribute around 35% of their income in house rent.
In certain cases, property owners find faulty ways to evict tenants in order to increase the rent. This also leads tenants into trouble of searching for a new rental unit, packing and moving charges, settlement time, legal cost, etc.
**Note** Buy, Sell, Rent San Diego always provides legitimate justification, adequate paperwork, and advanced notice before asking our tenants to move.
What Can Tenants Do?
Be aware of rent raise law:
If you have a lease for more than 30 days (e.g. 1-year lease), your rent cannot be increased during the term of the lease unless the lease allows rent increases. If you have a periodic rental agreement (month-to-month), your landlord can raise your rent. However, he or she must give you proper advance notice in writing. (Civil Code Section 827 (b)). Thus, in these terms, a lease is better than a rental agreement.
Maintenance with rent:
Tenants can request an upgrade or repair in exchange for a higher rental rate. However, they must discuss this before renting the property. It also has to be noted down in the agreement. The vice-versa is also possible, where the tenants offer a repair work done for a lower rent rate.
Tenants can form associations and conduct regular meetings for the same. This would help them be united in times of distress. A powerful pressure ensures corrective actions when need be.
These are just a few of the many precautions a tenant needs to take before renting a property in San Diego. However, if you are interested in renting a trustworthy property manager in downtown San Diego with a trusted name, contact Claudette Cooper at (619)825-1974 today.