Rent Increase

CPI & banking

Rent can only be raised once a year. Rent increases can only happen every 12 months after a tenant’s move-in date or 12 months after the last rent increase.

California law requires that tenants receive written notification 30 days in advance. For rent increases greater than 10%, tenants should receive 60 days notice. NOTE: Oakland rent law prohibits rent increases higher than 10%.

The Oakland Rent Adjustment Ordinance (O.M.C. 8.22.070) allows an annual rent increase based on the regional Consumer Price Index (“CPI”). The “CPI rate” takes effect on each July 1 and remains in effect through June 30 of the following year.

A property owner can raise rent above the CPI rate, based upon the justifications listed on this page. One justification is “banking”. “Banking” refers to deferred allowed annual rent increases. These annual rent increases are determined by the City and are also known as CPI increases or annual general rent increases. Annual rent increases that were not given, or were not given in full, can be carried forward to future years. Subject to certain limitations, property owners may defer giving annual general increases up to ten years. General increases that were not imposed within ten years expire. If challenged, evidence of the rental history of the subject unit is required.

The annual CPI rate for rent increases effective July 1, 2016 through June 30, 2017, is 2.0%. The rate is not applied to rent increases that take effect earlier than July 1, 2016.

  • July 1, 2017: 2.3%
  • July 1, 2016: 2.0%
  • July 1, 2015: 1.7%
  • July 1, 2014: 1.9%
  • July 1, 2013: 2.1%
  • July 1, 2012: 3.0%
  • July 1, 2011: 2.0%
  • July 1, 2010: 2.7%
  • July 1, 2009: 0.7%
  • July 1, 2008: 3.2%
  • July 1, 2007: 3.3%
  • May 1, 2006: 3.3%
  • May 1, 2005: 1.9%
  • May 1, 2004: 0.7%
  • May 1, 2003: 3.6%
  • July 1, 2002: 0.6%
  • March 1, 1995 – June 30, 2002: 3% per year

Increased housing service costs

Housing Service Costs are expenses for services provided by the property owner. The costs are related to the use of a rental unit and also known as “operating expenses”. The most recent two years of operating expenses are compared to determine if a rent increase is justified. The calculation in both years must provide a reasonable comparison of all expenses. If the increase is challenged by a tenant before the RAP,, evidence is required to prove each of the claimed expenses.

The expenses considered include property taxes, business license/taxes, and insurance, P.G. & E., water, garbage, maintenance and repairs, managerial costs and other legitimate annually recurring expenses to operate the rental property, except debt service. You may not isolate any single expense.

Uninsured repair costs

Uninsured repair costs are casualty losses that are not reimbursed to the property owner. Casualty losses are related to damage from fire, earthquake, or other disasters. These costs must be associated with repairs to meet state or local laws. An increase for uninsured repairs is calculated the same way as an increase for capital improvements.

Capital improvements

Capital improvements increases may be taken to reimburse the property owner for property improvements. Reimbursement is limited to 70% of the cost of the improvement amortized over its useful life. The property owner must show the costs incurred were to improve the property and benefit the tenants. Property owners must also show that these costs were paid. Examples include: copies of receipts, invoices, bid contracts or other documentation.

Fair return

A property owner may submit evidence to show that without the requested rent increase he or she is being denied a fair return on the investment. A property owner must show that the return on the investment is less than the return for an investment of similar risk. At minimum, the property owner is required to provide three things.1) proof of the amount of investment 2)evidence of the return from other investments of similar risk 3) an analysis of the rate of return from the rental property, including any appreciation in the value of the property.

What tenants can do


Best practices

An owner may increase a tenant’s rent only once in any twelve month period. Many owners give several small increases in a year as their costs rise, rather than a single increase for the year. All increases given in any 12 month period after the first one are invalid. Effective 2/1/17, the Rent Ordinance requires property owners to petition for any rent increase not based on  CPI increase or Banking.

The owner is required to give each tenant at the beginning of the tenancy a “Notice to Tenants” (or RAP Notice). This notice explains the existence of the Rent Board and tenant’s rights under the rent law. If the owner does not give that notice, they may not give the tenant any rent increase until 6 months after the proper notice is given to the tenant.

A tenant has the right to request in writing a summary of the owner’s justifications for the rent increase. This request must occur within 30 days of being served with a rent increase notice. The owner must respond in writing with the justifications within 15 days of service of the tenant’s request.

 

File a petition with the Rent Adjustment Program

A tenant must file a petition within 90 days of receiving a rent increase notice or a discrete decrease in services. There are exceptions. For example, if the owner didn’t give the RAP Notice when the tenant moved in, then the tenant may file a petition within 90 days of first receiving this notice. If there is an ongoing decrease in services caused by the condition of the property, the tenant may file a petition at any time but is limited to 90 days of restitution.

If you don’t know how much time you have petition to challenge an increase, immediately phone the RAP or take the notice of rent increase to the RAP Office and ask to speak to an analyst.

 

If an owner has filed a petition against you

A tenant is required to file a Response to the petition within 35 days of the petition being mailed. This mailing date can be found on the “Proof of Service” included with the notice.

You have the option of trying to resolve an owner petition by a having the dispute resolved through a hearing or mediation.

Mediation is a voluntary meeting between tenants and property owners, presided by a trained mediator, to discuss the problem and possible solutions.The parties have the option of choosing their own outside mediator or using an assigned mediator who is a member of the RAP staff. There is no charge for a RAP staff mediator. An outside mediator may charge a fee.The goal is to assist the parties to reach an agreement rather than holding a Rent Adjustment hearing. Often disputes between the tenant and owner can be resolved more effectively through a mediation rather than a formal hearing.

Mediations are only scheduled if BOTH parties have requested this option, which you can do when filling out the petition form If the parties cannot agree in mediation, your case will go to a formal hearing before a Hearing Officer.

A hearing is like an owner-tenant small claims court, but limited to issues that arise under the Rent Adjustment Ordinance. In a hearing, the Hearing Officer will apply the rules in the Ordinance and Regulations and certain other laws to your situation and issue a written decision. Hearings are held in person at the RAP office, 250 Frank H. Ogawa Plaza, Suite 5313, in Oakland, California.

Learn about the petition process File a petition Respond to a petition

What property owners can do


Best practices

Giving Notice to Tenants: The RAP Ordinance requires that a property owner provide the RAP Notice to tenants. This must happen at the start of the tenancy. The Ordinance also requires that you serve another RAP notice together with a notice of rent increase or notice of change in terms of tenancy.

One Increase each Year: A property owner may increase a tenant’s rent only once in any twelve (12) month period. Some owners might prefer to give several small increases in a year as their costs rise rather than a single increase for the year. However, all increases given in any 12 month period after the initial increase are invalid.

Annual General Increase (CPI) and Justified Increases: Property owners do not need to petition for increases based on the annual CPI increase or Banking. The annual CPI Rent Adjustment rate is published each year in April, and is effective July 1, of each year.

Rent increases in excess of the annual CPI increase may be justified on one or more of the grounds listed on this page. More than one justification may be used to increase the rent at the same time. CPI, banking, and capital improvements can be passed through as a rent increase in a single petition. A CPI increase may not be taken together with an increase based on increased housing service costs or fair return, because these justifications replace the current year’s CPI increase.

Tenant’s can a written request for a summary of the owner’s justification for the rent increase within 30 days of the notice of increase. The property owner must provide the requested information within 15 days of the tenant’s request.

 

Calculating Justified Rent Increases

You must calculate the exact amount of rent you may charge a tenant when increasing the rent based on justification.

You can download excel spreadsheets instructions from the Calculator page to help you to perform the calculations. For questions on the calculations, please contact RAP Staff at (510) 238-3721.

 

File a petition with the Rent Adjustment Program

Effective 2/1/17, the Rent Ordinance requires property owners to petition for any rent increase not based on the CPI increase or Banking. Property owners may also petition for an exemption from the RAP for qualifying properties. Property owners may apply to remove a property from the rental market as allowed by the Ellis Act.

 

If a tenant has filed a petition against you

An owner is required to file a Response to the petition within 35 days of the petition being mailed. This mailing date can be found on the “Proof of Service” included with the notice.

You have the option of trying to resolve an owner petition by a having the dispute resolved through a hearing or mediation.

Mediation is a voluntary meeting between tenants and property owners, presided by a trained mediator, to discuss the problem and possible solutions.The parties have the option of choosing their own outside mediator or using an assigned mediator who is a member of the RAP staff. There is no charge for a RAP staff mediator. An outside mediator may charge a fee.The goal is to assist the parties to reach an agreement rather than holding a Rent Adjustment hearing. Often disputes between the tenant and owner can be resolved more effectively through a mediation rather than a formal hearing.

Mediations are only scheduled if BOTH parties have requested this option, which you can do when filling out the petition form If the parties cannot agree in mediation, your case will go to a formal hearing before a Hearing Officer.

A hearing is like an owner-tenant small claims court, but limited to issues that arise under the Rent Adjustment Ordinance. In a hearing, the Hearing Officer will apply the rules in the Ordinance and Regulations and certain other laws to your situation and issue a written decision. Hearings are held in person at the RAP office, 250 Frank H. Ogawa Plaza, Suite 5313, in Oakland, California.

Learn about the petition process File a petition Respond to a petition