I learned that a resident no longer lives in his one-bedroom apartment and has been subletting it since 2022. I found an old advertisement where he was offering the place for twice as much rent. What can I do?
The first course of action you must take is to donate to the campaign to save the Costa-Hawkins Rental Housing Act from being repealed. Visit www.SaveCostaHawkins.com and join the SFAA along with the California Apartment Association’s political action committee to defeat the Justice for Renters Act, a measure set to appear on the November 2024 ballot and, if passed by the voters, shall fully repeal Costa-Hawkins.
At this time, solely because of Costa-Hawkins, a state law that passed in the mid-1990s, you are permitted to adjust rent to market because the original occupant (your tenant) is no longer using the housing as a permanent place of residence. Confer with an attorney to help you prepare and serve the proper notice to effectuate this rent adjustment. In addition, you may want to concurrently engage a private investigator to assemble evidence to support your position that this person no longer lives in the one-bedroom apartment. Your attorney will also provide guidance on how to stop your tenant from “lease profiting” by charging more rent than what is paid to you, a scheme that is expressly prohibited by the City’s rent law.
Keep in mind that your tenant may challenge the rent increase either in court or at the Rent Board. The Rent Board takes the position that certain excusable absences do not equate to a permanent departure. For example, school and work commitments, caring for a family member, or even lengthy vacations and sabbaticals often justify an absence that does not permit a new rental rate. In addition, the Rent Board allows for multiple permanent places of residence, meaning someone may split their time between households and not lose their rent control protection. But you should still make the effort to adjust rent now while Costa-Hawkins remains the law of the land.
Should the Justice for Renters Act pass in November, all of this goes away. Because the City’s rent laws permit subletting regardless of lease restrictions and prohibitions, tenants will, should Costa-Hawkins be repealed, be able to leave and hand over their keys to new occupants and you will not be able to increase rent to market. In addition, a repeal of Costa-Hawkins will permit cities throughout the state to enact what is known as “vacancy control” which is a stringent form of rent control where the government sets the price points for apartments regardless of who leaves or stays. Indeed, without Costa-Hawkins, the City can pass regulations that will dictate maximum rents for fully vacated and renovated apartments, meaning you will never achieve a market rate rent under any circumstance. If you doubt this could happen, just ask housing providers in the nation’s largest rental market, New York City, where a June 2019 legislative overhaul greatly strengthened vacancy control regulations and, as a result, multifamily real estate values plummeted by 30-35%.
In sum, don’t delay your contributions to SaveCostaHawkins. Should the repeal pass, you could be stuck with this new occupant at the same rental rate forever save for the small annual allowable increases. Once you have donated, have your attorney issue a Costa-Hawkins rent increase notice and hire a private investigator to compile the necessary data to address any legal pushback from the departed lessee.