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Annual Rental Increases in San Francisco

Annual Rental Increases in San Francisco

 

What Buildings are Subject to Rent Limitations?

            If tenancy commenced after January 1, 1996, single family homes and condominiums are exempt from rent increase limitations (but not just cause eviction provisions) of the San Francisco Rent Ordinance. Most other residential rental units constructed prior to June 13, 1979 are subject to the Ordinance.  The San Francisco Rental Ordinance governs how and when Landlords can raise the rent for Tenants.  Commercial properties, even with incidental and infrequent residential use, are not subject to the San Francisco Rental Ordinance or its restrictions on rental increases. 

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Who Decides Annual Rental Increases?

            On March 1st of each year, the San Francisco Rent Board publishes the percentage approved for annual rent increases based on the Consumer Price Index (CPI) as calculated by the U.S. Department of Labor.  The increases are capped at 7%, and cannot exceed a Tenant’s base rent by more than 60%.  For 2017, the approved increase is 2.2%.  The percentage is applied only to the Tenant’s base rate (not any approved passthroughs).  Annual increases cannot be prorated. 

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When and How are Annual Increases Implemented?

            It is up to the Landlord to decide if and when to impose an annual rent increase.  Although the rates are published on March 1 of each year, the date that an increase is passed on to a Tenant varies.  Most commonly the Landlord will impose the annual rental increases on the Tenant’s anniversary date (i.e. one year after move-in or the date of the last rent increase).  Only one increase can be imposed within a 12-month period. 

Can Annual Rent Increases be “Banked” Over the Years?

            Yes.  A Landlord may decide to forgo an annual rental increase, and can “bank” that increase for a later time.  Only one rental increase can be made every 12 months, so if a Landlord intends to bank increases, they should impose all banked rental increases on a Tenant’s anniversary date in order to avoid forfeiting any portion of banked increases. 

What Notice is Required to Tenants?

            Tenant notice requirements are strictly regulated by the San Francisco Rent Board.  A Tenant must be given 30 days written notice if the total increase is less than 10% of the Tenant’s base rent, or 60 days written notice if the total increase exceeds 10% of the Tenant’s base rent.  The notice must clearly specify the percentage increase and dollar amounts.  If banked increases are being applied, the notice must state what years, percentages and dollar amounts are being applied.  The notice must state what the Tenant’s new rent will be and the date it will go into effect.  Failure to comply with the notice requirements or incorrect calculation of rental increases results in the increase being subject to nullification by the San Francisco Rent Board.  

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