Tenants in rent controlled apartments will see their rents increase by 2.8 percent or $67 this year, whichever is lower.
The Board has the option, but not requirement, to impose a dollar amount limit to the annual general adjustment (GA).
Rent increases in rent-controlled units are determined by a formula based on the Consumer Price Index (CPI), which limits rents to 75 percent of the CPI. This year, with a CPI of 3.7 percent, rent increases will be capped at 2.8 percent for the next year. However, the Rent Control Board has the option to establish a dollar cap on increases, which would be a maximum of $67 per month for units already paying $2,375 or more.
Last year, record inflation rates of about 8.5 percent led to a rent increase of 6 percent, the highest allowable increase at the time. This sparked a renter rebellion and prompted local officials to propose a charter amendment, Measure RC, which aimed to lower the maximum allowable rental increase to 3 percent per year, regardless of the CPI. Measure RC also rolled back the 2022 general adjustment to an average of 3 percent.
To achieve the rollback, landlords who had increased rents by 6 percent before the election had to reduce rents to a 0.8 percent increase for the rest of the year. For example, if the rent was initially $1,000, it would have increased to $1,060 for the first part of the year and then dropped to $1,008 for the remainder of the year.
As a result, the average increase for the year was three percent. This year’s adjustment will be applied to that rate, meaning the 2.8 percent increase would be applied to an annual rent of $1,030 in the example situation, resulting in a rent of $1,059 for this year.
The dollar cap amount is also determined by a preset formula pegging the increase to the eighty-fifth percentile of the maximum allowable rents (MAR). This year, the formula resulted in a dollar cap of $67 meaning tenants in rent controlled units will see their monthly rents increase by 2.8% or $67, whichever is lower.
"Thus, a maximum increase of $67 would apply to all units with MAR’s of $2,375 and above. Because a $67 ceiling would apply only when it would yield a lower rent increase than application of the 2.8% general adjustment, the ceiling necessarily applies only to higher rents," said the staff report. "This means that imposing a ceiling would result in a proportionately smaller increase for market-level tenancies than for many long-term controlled tenancies. For example, a tenant paying $1,500 per month will see an increase of 2.8%. A tenant paying $3,000 per month would, as the result of a $67 ceiling, see an increase of 2.23%."
