Rent Control in San Francisco

San Francisco has recently risen to be one of the most expensive zip codes in the nation with some of the most stringent bylaws for rent control in the state. Because of this, the restrictions placed on rental fees and evictions have become of the utmost importance to renters and landlords alike.

While California recently approved statewide laws regarding rent control, rent control ordinances at the local level take precedence over rent control ordinances at the state level. Here are some of the local rent control ordinances in San Francisco that renters and landlords should be aware of.

Rental Caps and Fee Increases in San Francisco

San Francisco allows landlords to increase rent once every 12 months. The most recent allowable increase was 2.6% of the base rent of any unit and lasts from March 1 to February 29, 2020.

The allowable increase of rental fees is based on 60% of the Consumer Price Index for all urban consumers (inflation) in the Bay Area, which is currently at 4% This is in contrast to California, which allows landlords to impose an annual increase of 5% annually plus inflation.  Areas outside of the Bay Area may adhere to the Consumer Price Index of California as a whole which is currently at 3.3%. Rental increases can also be influenced by a fluctuation of the utility fees charged by Pacific Gas and Electric when the landlord pays those expenses.

Fees Based On Capital Improvements

Another factor that can cause rental fees to increase is when capital improvements are made to a building. These are typically structural improvements that are intended to increase the integrity and value of a building.

Landlords must seek approval from the Rent Board in order to increase rental fees after the capital improvements have been completed. Tenants can dispute any proposed increases in rental fees based on capital improvements if it is believed that the work was never done, the work was unnecessary, or that the work was done in order to gentrify the building.

An increase in rental fees imposed on residents to compensate for capital improvements will only last until the amount for the improvements have been recovered. In other words, after the capital improvements have been paid for by the increased rent, rental fees revert to the base rate plus any applicable fees that may have occurred in the interim time.

Relocation Fees Paid to Tenants Displaced Due to Capital Improvements or the Ellis Act

Landlords are responsible for paying relocation fees to tenants when the construction of capital improvements creates a situation where the building is uninhabitable. Relocation expenses paid to tenants who are evicted in order for capital improvements completed before February 29, 2020 is $6,980 per tenant or $20,939 per unit. In addition, an additional $4,654 must be paid for every elderly person 60-years-of-age or older.

Landlords must pay tenants a similar relocation assistance upon evicting them under the Ellis Act. This law allows landlords to evict all tenants from all units in order to convert the building into condos, effectively removing all units from the rental market. In this case, the landlord must pay each tenant $6,985.23 or a maximum of $20,955.68 per unit. An additional $4,656.81 is due to each tenant 62-years-old or older.

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Excluded Structures and Exceptions to Rent Control Ordinances

Buildings constructed after June 13, 1979 are not covered by rent control. Subsidized housing is also excluded from the rent control ordinance, although eviction protections are still applicable to tenants living in subsidized housing. The other exceptions are the tenancies of residential hotels with less than 32 days of tenancy, dormitories, monasteries, nunneries, condos, and single-family homes.

San Francisco has also created a special set of provisions for non-residential commercial space that people continue to live in with the landlord’s knowledge. So long as the landlord is aware of tenants using these spaces as residences, then these spaces are covered by the rent control ordinance.

Requirements to Justify a For-Cause Eviction

When a landlord is seeking to evict a tenant with a for-cause justification, they must provide the renter with a written notice. The exact reason for eviction must be disclosed in the notice as well as notifying the renter that they can seek advice on the matter from the Residential Rent Stabilization and Arbitration Board.

If the eviction is on the grounds for failing to pay rent, the landlord must first deliver a Three Day Notice that states the amount due, the name of the person to whom the rent should be paid, along with their address and phone number. In addition, the notice must list a financial institution with a corresponding account number that can be used to submit an electronic payment. Finally, the notice must list the location along with the days and times that the renter can deliver a payment in person.

For-Cause Justification for Eviction in San Francisco

San Francisco requires that landlords have one of the for-cause justifications provided under the rent control ordinance listed in an eviction notice when evicting a tenant. While some tenancies such as those regulated under Section 8 are excluded from the protections of rental increases, they are still protected from no-cause evictions.

A tenant has paid their rent late a minimum of once or twice and the landlord has provided a written warning on each separate occasion.

A tenant has violated an aspect of the rental agreement and has failed to remedy the contractual breach.

• The continued disturbance of other tenants in the building or landlord with the specific nature of the nuisance stated on the eviction notice.
• The owner or their immediate family plans to make the unit their permanent residence.
• The owner either plans to demolish the structure or to permanently remove it from the rental market.
• During the implementation of capital improvements making the structure unsafe and uninhabitable while the work is being done. Once the work is completed, the tenant must be allowed to reoccupy the unit.
• The withdrawal of all units from the rental market under the provisions of the Ellis Act with the plan to convert the units to condos.
• To perform rehabilitative work on a building that’s at least 50-years-old. 75% of the expense must be for the cost of construction.
• The tenant has continued to refuse the landlord access to the unit to perform      inspections or repairs following a written notice to comply.
• Evictions based on the compliance with the requirement of the San Francisco Health code for lead abatement.
• The only person remaining in the unit is an unapproved subtenant.
• Continued illegal activity is occurring in the unit.
• Refusal by the tenant to sign a new lease agreement following the expiration of the original agreement.
• Following the expiration of “Good Samaritan Occupancy Status” of a renter expires and the landlord serves the renter with a notice of eviction 60 days after the status expires.

Note: Good Samaritan Occupancy Status can be granted to a renter who loses their house due to a disaster and the landlord rents them another property at a lower rate.

Final Word

The laws that govern rental price and eviction policies in San Francisco have an extensive set of guidelines that can be difficult to maneuver for those uninitiated to the legal landscape. Knowing these laws—and how they differ from those of the rest of California—will help renters and landlords have the most beneficial experience living in the biggest little city by the bay.