General San Francisco Real Estate News

What is San Francisco’s Allowable Rent Increase for 2015?

SF’s Allowable Rent Increase for 2015 Announced for 3/1/15 – 2/29/16

SF Rent Board

Per the City and County of San Francisco Rent Board, starting March 1, 2015 through February 29, 2016, the allowable annual increase amount for rent in San Francisco will be set at 1.9%. In accordance with Rules and Regulations Section 1.12, this amount is based on 60% of the percentage increase in the Consumer Price Index (CPI) for All Urban Consumers in the San Francisco-Oakland-San Jose region for the 12-month period ending October 31, which was 3.2% as posted in November 2014 by the Bureau of Labor Statistics.

To calculate the dollar amount of the 1.9% annual rent increase, multiply the tenant’s current rent amount by .019. For example, if the tenant’s current rent is $1,500.00, the annual increase would be $57.00: $3,000.00 x .019 = $57.00. The tenant’s new rent would be $3,057.00 effective March 1st, 2015.

To compare what the allowable rental increases were several years back:
March 1, 2015 – February 29, 2016 1.9%
March 1, 2014 – February 28, 2015 1.0%
March 1, 2013 – February 28, 2014 1.9%
March 1, 2012 – February 28, 2013 1.9%
March 1, 2011 – February 29, 2012 0.5%
March 1, 2010 – February 28, 2011 0.1%
March 1, 2009 – February 28, 2010 2.2%
March 1, 2008 – February 28, 2009 2.0%

For a full comparison list of annual rent increases in San Francisco since 1982, click here.

If you are an apartment building owner or landlord and have any questions, don’t hesitate to contact your San Francisco multi-family specialists today at the Red Bridge Group.

Ellis Act Relocation Fees: what a landlord needs to pay a tenant

Effective June 1, 2014, Rent Ordinance Section 37.9A was amended to require a landlord to pay to specific Ellis Act Relocation fees to tenants evicted under the Ellis Act the greater of the relocation payment amount specified above or the “Rental Payment Differential” defined as “an amount equal to the difference between the unit’s rental rate at the time the landlord files the notice of intent to withdraw rental units with the Board, and the market rental rate for a comparable unit in San Francisco as determined by the Controller’s Office, multiplied to cover a two – year period, and divided equally by the number of tenants in the unit.” (See Subsections 37.9A(e)(3)(E).

Here is a look at how a landlord would have to calculate the rent payment differential using the Controller’s Schedule for proper Ellis Act Relocation Fees for a tenant:

A. Year in which the Unit’s Base Rent was Established
B. Total monthly rent at time of filing of Notice of Intent to Withdraw Units
C. Rental payment differential multiplier
D. Monthly rental payment differential amount (B x C)
E. Total relocation payment amount using controller’s schedule (D x 24 months)
F. Relocation payment amount per tenant (E / number of tenants per unit)
G. Plus additional amount due to elderly or disabled tenant (if applicable)
H. Total relocation payment due to tenant (F + G)

We quickly ran some numbers for an investor client on a property in Noe Valley so they could understand what the Ellis Act Relocation Fees would be. The units were run down and clearly the seller did not have any money over the years from the low rents to update or maintain the property to today’s standards. Based on this new law, if our client wanted to Ellis Act this building, a relocated tenant in the building would be entitled to the following:

A. 1980
B. $857.52
C. 2.5740
D. $2207.25
E. $52,974
F. $52,974

In July 2014, landlords eventually sued the city to challenge this new ordinance. In this example, our client would have to pay this tenant $52,974 in Ellis Act Relocation Fees just for evoking a state law that allows a property owner to take a building off the rental market.

The Ellis Act is a state law and the tenants are supposed to financial money to help with relocation—not be a calculation of what the tenant should be entitled to based on draconian San Francisco city laws that are not effective.

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