Several new policies and amendments surrounding rent increase and rent control have come into effect since 2020. Some of these laws and rules are simply clarifications of laws that have already been in place, other rules and laws have had a significant impact on the way that landlords manage their rental investment properties in the United States.
Based on the current market scenario, prime locations and prize properties are expected to grow more financially lucrative each year. Despite the economic setback due to COVID-19, the investment rental market is gradually making its way back to normality and the demand for rental properties in Placer County is increasing.
As a landlord in California, you need to know how you can calculate a rent increase in the upcoming years.
Tips to Calculate a Rent Increase
- Be Aware of the Changes in the Rent Cap
The Tenant Protection Act of 2019 (AB1482) allows a maximum rent increase of 5% + the Consumer Price Index (CPI) or the yearly change in the cost of living up to 10%.
As the CPI varies for different counties and neighborhoods in California, the net rent increase may differ from place to place.
For example, if you are living in a neighborhood where the CPI is 2%, the total rent increase you can charge would be 5% + 2%, i.e., 7%.
Note: You need to use the April CPI for this value.
For a generalized value, you can increase the rent by a minimum of 5%, without breaking any laws. To get a more detailed idea of the rent increases permitted by law in your county, talk to a property manager in your area.
- Factor in the Annual Increases Permitted Under California’s Rent Control Laws
California is one of the states in the country with a state-wide rent control law. However, as the local laws for rent caps and frequency of increases differ from place to place you need to factor in the annual rent increases permitted by state and federal law.
For most counties a landlord can increase rent no more than twice in any continuous 12-month period. In other counties, like East Palo Alto, the number of rent increases is not specified, but the rent increase is limited to 80% of the percentage increase in the CPI and has to be less than 10% in any 12-month period.
California has become one of the fastest-growing and most popular rental markets in the United States, as people from all over the country are relocating to the golden state for work, education, and lifestyle.
As a result, managing a rental property and rent increases, keeping track of rent laws and rent calculation can become difficult for new landlords, or landlords who own a lot of properties.
Eliminate the hassles of keeping up with tedious laws and regulations by connecting with Action Properties, your full-service property management company in Placer County, California. We are a trusted and known property management partner for many households in the area and we can help you resolve all your rent increase-related queries with ease. Contact us today.
