Rental cap of 10% increase - 4S ranch san diego
Hello,
I have a rental property ( Condominium ) in 4S Ranch, Sandiego, I am currently 30% lower than the current market rate.
i wanted to confirm if the rental cap of 10% per year Maximum will apply for me? I found the below article and according to this single family homes and condominiums might be exempted.
Will the rental cap apply M2M lease as well?
Appreciate any information.
https://cal-rha.org/advocacy/a...
Rent Control Exemptions
If your property is included in the list below, it is exempt from AB 1482:
- Housing restricted by a deed, regulatory restriction contained in an agreement with a government agency, or other recorded document as affordable housing for persons and families of very low, low, or moderate income, as defined by the law;
- Dormitories constructed and maintained in connection with any higher education institution within the state for use or occupancy of students in attendance at the institution;
- Housing subject to more restrictive rent control ordinances;
- New Construction – housing that was issued a certificate of occupancy with the previous 15 years. This means some of the housing previously exempt under Costa Hawkins will now be subject to the State’s rent control provisions.
- Owner-Occupied housing accommodations in which the tenant shares a bathroom or kitchen facilities with the owner who maintains principal residence with the residential real property;
- Owner-occupied duplex in which one of the units is the owner’s primary residence at the beginning of the tenancy and the owner continues in occupancy;
- Single-family homes and condominiums if the owner is not a real estate investment trust, a corporation, or a limited liability company in which at least one member is a corporation.
It appears you are exempt as long as you own it under your personal name. If it were owned under an LLC, corporation, or other entity, then it would apply.
When your tenant is 30% below market, you are better off terminating them and starting over with a new tenant that you have screened to ensure they can afford the market rate.
Appreciate it Nathan! Am i obligated by law to offer the existing Tentant M2M lease option?
Quote from @Ram Kakulavaram:
Appreciate it Nathan! Am i obligated by law to offer the existing Tentant M2M lease option?
@Nathan Gesner description was accurate for the state wide rent control. The statewide rent control applies to multifamily as single property (exclusion for corporate owned, etc) with exclusion for duplexes under certain owner occupied conditions.
Because the state wide rent control rules do not apply, you could normally terminate the occupancy when the lease is up but must give 2 months notice if they have been in the unit over a year (very likely if their rent is 30% below market).
Now here is the issue. 4s is in the city of San Diego. the city of San Diego still has (just recently extended) its Covid eviction moratorium. you can search for “San Diego eviction moratorium”. this moratorium applies until Sept 30, but I would not presume that it will not be extended again. This implies at this time you cannot no fault evict the tenant (I.e you cannot choose to not have lease extend into month to month). I have not heard of anything indicating for single family units you cannot raise the rent (providing 60 days notice) resulting in tenant providing notice. Do your own research on being able to raise the rent. Note for units that statewide rent control applies (not your unit) the rent can only be raised 10%. I use only not to imply 10% is not significant but to imply rent increase is capped/controlled; I recognize with our average rent 10% is average of $300/month rent increase which is a significant increase (but warranted in San Diego’s current rental conditions (property values have increased far more than rents for a decade, high inflation, new risks associated with variance new ordinances (including the various eviction moratoriums), huge demand with minimal supply).
If I were you, I would verify there is nothing preventing you from raising the rent to market rate. If nothing is preventing you from raising the rent as much as you desire, I would provide immediate notification of rent increase starting in 2 months (minimum legal notice). If I wanted the tenant out, I would also provide immediate notice of termination for Sept 30. This notice would be compliant by the existing eviction moratorium.
Rent should never get 30% below market. What would you do if the state or city passed a rent control limiting increases to 3% annually (see Santa Barbara rent control)? If you are not going to properly manage your unit, hire someone that will. You will easily get enough additional rent to pay for the services. Properly manage includes keeping the rent near market rent, regular unit inspections, properly vetting/screening tenants, staying apprised of all the ordinances that apply to your unit (including, but not limited to, rent control and eviction moratorium ordinances), etc.
Good luck