Imagine if you will, you have been collecting rent for the house you used to live in for almost six years now. You have had the same tenants the entire time and have never increased the rent. You are going to have to put some money in the place soon, and your wife keeps telling you to increase the rent, but you don’t really feel like dealing with it. How do you even go about raising the rent?
I’ll explain.
How Do You Increase the Rent in California?
Increasing the rent in California is not as easy as you may think. You need to determine how much you are legally allowed to raise the rent while being strategic about any increases you make. You also have to be sure you go about it correctly, by giving proper notice and adhering to the required timelines.
How Much Can You Increase the Rent?
If the property has two or more units and is older than 15 years, it most likely falls under AB 1482, known as the California Tenant Protection Act. Properties that fall under AB 1482 have a rent cap that limits annual rent increase to no more than 5% plus the percentage change in the regional CPI or 10%, whichever is lower.
The August 1, 2025, to July 31, 2026, rent cap for the Los-Angeles-Long Beach-Anaheim region is 8%, which is the base of 5% plus the regional CPI of 3%.
This only applies to properties that fall under AB 1482. Most Single-Family Homes, including condominiums, are exempt from AB 1482 and are not subject to this rent cap.
However, some local ordinances are stricter than AB 1482. Check with the local housing authority or an attorney specializing in tenant-landlord law to make sure your property is not in an area, such as the City of Los Angeles, that has stricter requirements before moving forward with any rent increases.
Should You Increase the Rent and by How Much?
Just because you can raise the rent does not necessarily mean you should. Landlords need to understand that rents don’t just automatically go up every year. The general trend is that rents go up, but there are some years when rents stay flat or even go down.
Savvy landlords compare their current rent to the market before making any adjustments. Being too aggressive can cause the tenant to move out and end up costing you money.
Try to find that “goldilocks” amount that is not too high and not too low. Afterall, having a rental property is a business, not a charity, while being greedy can cost you in the long run.
Warning
Even if the amount is legal, it is still against the law to raise the rent to retaliate against a tenant. Don’t just jack up the rent because the tenant just pissed you off.
Pro Tip
Landlords with several properties or large buildings can be more aggressive with higher rents since they have more units to make up for the cost of a vacancy, while if you only have one unit, you might want to be a little more careful, since if that tenant moves out, you won’t have any rent coming in to cover your expenses.
How do you Actually Do the Rent Increase?
Once you have determined it is legal and makes sound business sense to increase the rent, you still have to serve a written legal notice following specific rules.
Manner of Service
Rent increases must be served in one of the three following manners, including proof of service:
- Personal service: A copy of the notice must be personally given to the tenant.
- Mail: A copy of the notice sent by first-class mail, with at least five (5) additional days provided to allow for time to be delivered.
- Post and mail: A copy of the notice to be attached to a clearly visible location on the property and a copy mailed to the tenant.
In other words, you can hand it directly to the tenant, mail it to the tenant with extra time allowed for delivery, or post it on the property while also mailing it.
Pro Tip
You can call, email, or text the tenant if you like. Some managers feel it is better to warn the tenant that notice is coming and clarify the message. However, this additional communication does not negate your legal requirement to serve official notice in one of the three accepted methods of legal service.
Notice in Advance
You must give at least 30 days’ notice for increases of 10% or less and at least 90 days’ notice for increases greater than 10% (pursuant to California Civil Code 827). Always make sure that you are not increasing the rent more than you are legally allowed, and you must add at least five (5) extra days for delivery when mailing.
What Must Be Included
Some specific things must be included in the rent increase to be valid, which include:
- Disclosure regarding TPA: The Tenant Protection Act (TPA), aka AB 1482, must be disclosed to the tenant. Notice must declare if the property is exempt or if TPA applies.
- Actual amount of new rent: The actual new rent amount must be stated in dollars and not just as a percent increase.
- Effective date: The specific beginning date that the new rent amount starts must be explicitly stated.
- Proof of service: Proof of service must be included, stating how the notice was served.
- Specific legal language: There is specific legal language required when increasing the rent that should be reviewed by an attorney.
Pro Tip
Don’t try to create your own Rent Increase Notice unless you are an attorney who specializes in landlord-tenant law. There are well-crafted forms put together by organizations like the California Association of Realtors® and the Apartment Association. If you use a form from one of these associations, make sure it is the latest version because laws are always changing.
What Does It Mean?
You are sending a rent increase, not a love letter. Regardless of what kind of relationship you think you have with your tenants, you are sending a legal modification to a contract that has financial consequences to both parties. Therefore, you need to handle it with care.
Bottom Line
You must be very careful when you increase the rent in California.
You need to figure out how much the rent can be legally increased. Most properties with two or more units over 15 years old fall under the AB 1482, California Tenant Protection Act, which limits annual rent increases to no more than 5% plus the percentage change in the regional CPI or 10%, whichever is lower.
This rent cap does not apply to most Single-Family Residences, including condominiums. However, you need to check local ordinances since many properties, like those in the City of Los Angeles, have even stricter rules to follow.
Be sure to compare the current rent to the market before making any adjustments. Being too aggressive can cause the tenant to move out and end up costing you money.
If you are going to move forward with an increase, you must serve a legal notice to the tenant. This can be done by directly handing the notice to the tenant, mailing it to the tenant, allowing at least five extra days for delivery, or post notice on the property while also mailing it.
You need to give at least 30 days’ notice for increases of 10% or less and at least 90 days’ notice for increases greater than 10%. Your notice must include disclosure regarding AB 1482, the amount of new rent, the effective date, proof of service, and other specific legal language.
It is best to have an attorney create the notice or at least use the most up-to-date Rent Increase Notice available by an organization like the California Association of Realtors® or the Apartment Association.
Be careful, as this legal document modifies a contract that financially affects both landlord and tenant. Attorney review is always recommended.
Thank You
Thank you, and we hope that you found this helpful and informative. Remember, we are not attorneys, so we don’t give legal advice. Laws are always changing and vary depending on the specific municipality in which the property is located. For legal advice, please consult a real estate attorney familiar with the laws in your area.
For Real Estate Advice
If you are looking for a reliable property management company to help you handle a rental property or a real estate broker to guide you through the sales process in Long Beach, Los Angele,s or Orange County, California, or you are just considering it and have a few questions about real estate, contact the Mike Dunfee Group today! We are happy to help.
Dunfee Real Estate Services, Inc. DRE # 02026232
