In the city of San Diego, there are no limits on how much rent can be increased. However, tenant protections are in place. The City of San Diego Tenant Protections Ordinance prohibits eviction of a tenant unless the landlord has a legal basis, provides relocation benefits for no-fault evictions, and regulates buyouts.
The law governing rent control in San Diego is the Tenant Protection Act of 2019, which went into effect on January 1, 2020.
Because we often get so many questions about rent control and how to approach it as a San Diego landlord, we are sharing some of the things you need to know. Here is how to understand California’s rent control laws and what they mean for you.
Rental Increases: Timing and Amount
The state rent control law requires that landlords limit their rental increases to once per year or two increments in a 12-month period. Those increases cannot be more than five percent plus the annual cost of living increase that’s set by the Consumer Price Index (CPI).
The amount by which you can raise your rent will change annually, depending on that CPI. However, it will never be more than 10 percent. In San Diego County, landlords can increase rent by up to 8.6% from August 1, 2024 to July 31, 2025. That’s the current rate.
Who is Exempt from Rent Control? Who is Included?
Generally, the rent control law in California applies to apartments and multi-family units that are at least 15 years old. Most other rental properties are exempt from this law. Your property may be exempt if:
- You’re an individual landlord (not a corporation) who owns and rents out a single-family home, a townhouse, or a condo.
- Your property received a Certificate of Occupancy in the last 15 years.
- You are renting out a duplex, and you live in one of the units.
- You are renting out government-subsidized or affordable housing.
- Mobile homes
- Hotels
You need to include information on this law in your lease agreement so tenants understand whether rent control applies to them when they rent your property.
If you’re included in the rent control law, you’ll want to put something in your lease agreement to reflect that. It’s even more important to adjust your lease agreement if you’re exempt from the law. You want to notify your residents that the property they’re living in does not fall under this new law. This will eliminate confusion and disputes.
How Rent Control Impacts Landlords in San Diego
This has an impact on how you rent out your property, even if you’re exempt from the rent control law.
With rent control in place across the state, how do you increase what you charge your residents while still complying with the law? That depends on the CPI. The CPI is a measure of inflation that is established and measured by the Bureau of Labor Statistics.
While rates are measured and reported by the BLS throughout the year, the only statistic that matters is the annualized CPI rate reported for April.
If you’re included in the law, make sure you know what those limits are on an annual basis.
Even if you’re exempt from the law, you have to remember that you’re competing with San Diego rental properties that do have to comply with rental limits. You cannot raise your rent too much, or you’ll be priced out of the market.
The Challenges Rent Control Poses
Rent control laws present challenges that landlords must carefully manage.
- Limits on Revenue Growth
Under rent control regulations, your ability to raise rents is restricted, even if your expenses—such as taxes, utility bills, and maintenance costs—are rising. This can squeeze your profit margins over time. AS we mentioned, even property owners who are renting out single-family homes or other properties that are exempt find themselves competing with the rental rates of rent-controlled units.
- Complex Compliance Requirements
Navigating both statewide laws and local ordinances can be overwhelming. Non-compliance may result in hefty fines or lawsuits, making it critical to stay informed and work with legal or property management experts. It’s easy to make a legal mistake, and that’s not a risk you want to take.
- Disincentives for Property Upgrades
Rent control may discourage landlords from investing in property improvements, as the potential return on investment through rent increases is restricted. This can impact the property’s overall value in the long run. It’s difficult to balance keeping your property upgraded and profitable.
Just Cause Eviction
There’s more to this law than rent control. Just-cause evictions are required if you want to remove a tenant. Before this law was passed, you had the option of not renewing your lease with your tenants. You could simply provide the appropriate notice, they would move out, and you’d get your property back.
The big change in the eviction process is that in order to remove your tenants without penalty, you have to have just cause. This means they are not paying their rent, they’re engaging in criminal activity, or they’re not following the terms of your lease agreement. If you want to remove your tenants for another reason but you don’t have just cause, you can still serve them notice, but you’ll have to pay a relocation fee which is the equivalent of one month’s rent.
This is a general overview of rent control as it pertains to San Diego and the state of California. Let us know where exactly your rental property is located and how old it is, and we’ll give you a customized explanation of how rent control does or does not impact you where you are.
We know there’s a lot to digest when it comes to rent control. Please contact us at Ann Tasias & Associates. We’d love to tell you more and to be your San Diego property management resource. We manage real estate and investment homes in San Diego, along the I-15 corridor, in communities like Mira Mesa, Scripps Ranch, Poway, Rancho Penasquitos, and Rancho Bernardo.
