Rent Control 101: Everything Real Estate Investors in San Francisco Need to Know

Whether you currently own rental property in San Francisco or are thinking about purchasing this type of property, it’s essential that you understand what rent control is and how it impacts landlords and property owners.

Keep in mind that each city and state can have different rent control laws that you will need to adhere to. Laws for rent control in San Francisco are relatively complex if you’ve never dealt with them before. As such, it’s important that you brush up on rent control guidelines so that you can avoid legal issues and exposure to liability that can occur by violating the guidelines.

This article explains in detail how rent control works for San Francisco rental properties.

What Is Rent Control?

Rent control is a government program that limits how much money a landlord can effectively demand when renewing a lease or leasing a home.

The point of rent control is to make sure that living costs remain affordable for residents who have lower incomes. At the moment, only 182 municipalities across the country have rent control laws in place. All of these municipalities are situated in Washington, D.C., New York, Maryland, New Jersey, and California.

The rent control laws that exist in places like California have their benefits and drawbacks. Since violating these guidelines can expose you to liability, it’s important to understand how rent control works. that rent control doesn’t usually apply to new tenants, which gives you the ability to charge market rates on any vacant apartments in your rental property.

How Rent Control Works in San Francisco

In San Francisco, rent control laws are governed by the San Francisco Rent Ordinance. The San Francisco Rent Board administers the rent ordinance.

Along with mandating the provisions for rent control, this ordinance details just cause for eviction. In other words, you can only evict a tenant if there is a “just cause” to do so. Keep in mind that some rental units will have restrictions on them that limit how much new tenants can be charged by landlords because of past evictions.

While the majority of rental properties in San Francisco fall under the San Francisco Rent Ordinance, some of the residential units that aren’t covered by this ordinance will instead be covered by the California state rent control.

For any units that are only covered by the California rent control, increases for annual rent are currently capped at a basic 5 percent, plus the increase in cost of living. Annual rent increases can also be capped at 10 percent, depending on which number is lower. These rent control guidelines only apply to tenants who have lived in the rental property for at least 12 months.

In the units that aren’t rent controlled, rent can be increased at any time and by any amount as long as the tenant receives written notice beforehand.

Under the San Francisco Rent Ordinance, any increase in rent can only occur once each year by a set amount. This amount is tied directly to inflation in San Francisco. If you want to increase rent for other reasons, you can file an official petition with the San Francisco Rent Board.

Capital Improvements and Operating Costs

In the event that capital improvements need to be made to the rental property, the costs can be passed directly to the tenant via a max increase of 10 percent.

You can also pass on increased maintenance and operating costs with a max increase of 7 percent.

However, keep in mind that any rent increases you make that aren’t due to inflation will need to be fully documented and approved by the San Francisco Rent Board before you will be allowed to implement them. The tenant will have the ability to request a basic hardship exemption if the rent increase is due to an increase in maintenance and operating costs or capital improvements.

Exceptions to Rent Control

Exceptions to rent control in San Francisco include:

  • The tenant lives in subsidized housing
  • The tenant lives in a single-family home or condo
  • The tenant lives in a residential hotel with fewer than 32 days of tenancy

It’s also important to note that if you don’t properly maintain the premises or you take legally required services away from the tenant, the tenant could file a petition with the Rent Board to have their rent decreased.

When Tenants Move Out

In the majority of situations, rent control no longer applies when a tenant moves out. When the unit becomes vacant, it also becomes deregulated. So you can charge any amount that you would like for the unit in question.

What You Should Know About Eviction in Rent-Controlled Properties

When looking specifically at evictions in rent-controlled properties, it’s important to understand that San Francisco rent control guidelines state that you can only evict a tenant for one of 16 different “just causes”.

You can find a comprehensive list of these causes here. Keep in mind that it can be difficult to perform these evictions properly, which will give the tenant the ability to dispute the cause.

If the cause of eviction is considered to be “no-fault”, the eviction can’t occur during the primary term of the lease. A common cause of eviction in San Francisco involves not paying rent or regularly paying rent after the due date.

Learn More

While the guidelines for rent control in San Francisco are complex and comprehensive, adhering to these guidelines is relatively straightforward as long as you understand what rent control entails and how it applies to your property.

Get your San Francisco rent control questions answered. Call us now! (415) 346-8600