Guide to Berkeley’s Rent Stabilization Program
Rent Control & Eviction Protection
February 2013

RENT LEVELS

Calculating the Lawful Rent Ceiling

Every residential rental unit in Berkeley covered by rent control has a lawful rent ceiling. This is the maximum amount of rent that a landlord may charge for the use or occupancy of the unit and any associated housing services included in the rent, such as furnishings, parking or laundry facilities. Rent is not limited to money, but includes the fair market value of any goods or services that are provided to a landlord in place of money.

Before January 1, 1996: Lawful rent ceilings and housing services remained controlled even during vacancies. For units that have not had a vacancy since January 1, 1996, the lawful rent ceiling is the base rent (usually, the May 31, 1980 rent) plus increases the Board approves after that. (B.M.C. section 13.76.100.)

The base rent includes all housing services provided when that rent was established. Any change in housing services from those provided in the base year or at the beginning of the tenancy under a rental agreement is grounds for an adjustment of the lawful rent ceiling. (See Landlord IRA Petitions and Tenant IRA Petitions, below.)

Since January 1, 1996: Landlords have been allowed to set the initial rent for most new tenancies beginning on or after January 1, 1996, although the amount was limited through December 31, 1998. Since January 1, 1999, landlords have been allowed to set the initial rent at market unless the new tenancy follows a non-qualifying vacancy.

The initial rent becomes the new rent ceiling, which may be changed only with the Board’s authorization. Any change in housing services from that provided at the beginning of the tenancy is grounds for an adjustment of the lawful rent ceiling.

Non-qualifying vacancies. A landlord may not establish an initial rent if the prior tenancy ended after the landlord:

  • Served a 30-day notice of termination (except for some tenancies terminated for owner-occupancy before December 31, 1994 – contact a housing counselor for more information);
  • Changed the terms of the tenancy, except a lawful increase in the amount of rent or fees. (If a tenancy ends within twelve months of a landlord-imposed change in the terms of the lease, the change in the terms of the tenancy is presumed to be the cause of termination);
  • Engaged in harassment or other acts prohibited by law, or that constitute constructive eviction or a breach of the covenant of quiet enjoyment (verbal or physical abuse or intimidation, threats to evict, and failing to make necessary repairs are examples of harassment);
  • Was cited by a government agency for serious health, safety, fire, or building code violations (except those caused by disasters) that remained uncorrected for more than 60 days before the vacancy;
  • Opted out of a federal Section 8 contract entered into before January 1, 2000, and the new tenancy begins less than three years from the date the contract ended;
  • Opted out of a Section 8 contract entered into on or after January 1, 2000, and either: the contract lasted less than one year, or the tenancy already existed before the Section 8 contract was created.

(References: Civil Code section 1954.53 and Regulation 1013(B).)

Landlords or tenants can file a Petition to Determine Eligibility to Set Initial Rent (Regulation 1018) if there is a question about whether a vacancy was “qualifying”; if it was not, the landlord may not set a new initial rent for the next tenancy. This petition can also be used to determine whether the last “original occupant” has vacated the unit and thus provided an opportunity for the landlord to set a new rent. (See “Partial Turnovers in Tenancies” in Section 4 - Subletting and Replacing Roommates.)

You can search the Rent Board’s database on our website to find an apparent rent ceiling for residential units subject to rent control. To find out how to have a rent ceiling certified, see Certification of Rent Ceilings, below.

Tenants “Not In Occupancy” are not protected by rent ceiling controls. Only a tenant who lives in a unit as his or her primary residence remains protected under the Rent Ordinance. Rental units that are kept mainly as a second residence, such as a pied-a-terre or vacation home, or mainly for non-residential purposes (such as storage, commercial or office use) are not rent-controlled. A landlord who seeks a Rent Board decision that the tenant does not occupy the unit as a primary residence may file a Petition for the Determination of Occupancy Status. (Regulations 524 and 525.)

Rent Ceiling Increases

Rent ceilings may be increased by annual general adjustments or by amounts granted in an Individual Rent Adjustment (IRA) petition.

Annual General Adjustments (AGAs)

Each January 1, rent ceilings are increased by the annual general adjustment, which, since 2005, is 65 percent of the percentage increase in the Consumer Price Index for the metropolitan area. By October 31 of each year, the Board publicizes the amount of the AGA that goes into effect the following January 1st. (B.M.C. section 13.76.110.)

A landlord must be in compliance with the Ordinance and Regulations before raising the rent by the AGA amount. This means that:

  • The property is registered; in other words, the required forms have been filed and no fees or penalties are owed,
  • The rent charged is no more than the lawful rent ceiling, and
  • The unit has no serious repair problems or outstanding housing code violations.

A landlord must give a tenant at least 30 days’ written notice of the increase, in the format required by the Board’s AGA Order. If a tenant has a fixed-term lease, the landlord will have to wait until the lease term expires to impose the AGA (unless the lease allows the increase). AGAs granted since 1981.

Since 2000, landlords have not been granted AGAs for units for which they set an initial rent during the previous calendar year. Those AGAs may not be imposed in later years, either. For instance, a landlord is permanently ineligible to impose the 2013 AGA for a unit that had an initial rent established in 2012.

Registration Fee Pass-throughs

Since 2005, the Board has allowed landlords to pass through a part of the registration fee to tenants who have occupied their units since before 1999. This is approved annually. (The pass-through approved for 2012 was $4.00 per month.) Landlords must use a Board-approved form or language for the notice that they give tenants before imposing this increase, and landlords must submit a copy of the notice to the Board. This pass-through does not become a part of the permanent rent ceiling. Some low-income tenants may be eligible for reimbursement of the pass-through from the Board; contact a housing counselor for assistance.

Landlord Individual Rent Adjustment (IRA) Petitions

Landlords may petition the Rent Board for rent ceiling increases on the following grounds:

  • Increase in number of tenants from that allowed in the unit or actually residing in the unit with the landlord’s knowledge between June 1, 1979 and May 31, 1980; or, for tenancies beginning on or after January 1, 1999, from that allowed at the beginning of that tenancy. (Regulation 1270.)
  • Increase in living space or housing services from those existing on May 31, 1980, or; for tenancies beginning on or after January 1, 1999, from those existing at the beginning of the tenancy. (Regulation 1269.)
  • Historically low rent (HLR). (Regulation 1280.)
  • Capital improvements. (Regulation 1267.)
  • Adjustment or maintenance of net operating income (fair return). (Regulation 1262, Regulation 1264.)
  • Restoration of AGAs. (Regulation 1278.)
  • No units on a property have had a vacancy increase since December 31, 1998. (Regulation 1282.)

With vacancy decontrol in effect, there is less emphasis on obtaining rent increases through the IRA petition process. Also, in capital improvements petitions, vacancy increases often offset rent increases that a landlord would be eligible for. Landlords should contact a housing counselor for help in determining their eligibility.


Rent Ceiling Decreases

Tenant Individual Rent Adjustment (IRA) Petitions

Tenants may petition the Rent Board to reduce the rent ceiling, and do so most often because of housing code violations, habitability problems, or a decrease in living space or housing services. (Regulation 1269.) The petition process can be used to obtain rent reductions to compensate for such problems and to motivate a landlord to correct physical defects or restore space or services. Other grounds for filing a tenant IRA petition are:

  • Illegally high rent, unrefunded security deposit (Regulation 1271), and unpaid security deposit interest (Regulation 702).
  • Substantial deterioration of the unit, or failure of the landlord to provide adequate services, or failure of the landlord to provide services agreed to by the parties in their initial agreement, written or oral. (Regulation 1269.)
  • Reduction in the number of tenants allowed in the unit from the number allowed on May 31, 1980, or, for tenancies beginning after January 1, 1999, from the number allowed at the beginning of the tenancy. (Regulation 1270.)

Hearings

After a petition is filed, the opposing party has a limited time to submit an objection to the petition. If no objection is filed and a hearing examiner can issue a decision without testimony, the petition will be decided administratively, without a hearing. In most cases, a hearing is held, in which an impartial hearing examiner takes testimony and receives written evidence from both sides. In either case, the hearing examiner will issue a written decision granting or denying rent ceiling increases or decreases. A hearing examiner’s decision may be appealed to the nine-member Rent Board.

Instead of having the hearing examiner decide the petition, the parties may negotiate and reach a settlement agreement resolving the issues. If this occurs, the hearing examiner will write up the settlement as a decision pursuant to agreement, which is not appealable. For more information and to review and download petition forms, go to Petitions and Forms on our website. IRA petitions and hearing procedures are governed by B.M.C. section 13.76.120 and Chapter 12 of the Regulations.

Certification of Rent Ceilings

Rent ceilings that have been certified or determined in a final Board decision on a petition may not be changed retroactively unless there is evidence of intentional misrepresentation or fraud.

Rent ceilings for the majority of Berkeley’s registered rental units were certified in 1987. A previous rent ceiling certification is usually irrelevant for any unit that has had a vacancy since January 1, 1996, due to vacancy decontrol.

A landlord or a tenant of a unit for which the rent ceilings have not been certified, or who wishes to have the subsequent rent ceilings certified, may file a Request for Certificate of Permissible Rent Levels. In most cases, staff issues a certificate within five business days of the request.

A landlord or a tenant may challenge a Certificate by filing a petition appealing the Certificate. Go to Petitions and Forms on our website for more information and forms.

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