Increased Rent for Increased Services

If a service is added to an existing tenancy, can a rent increase be given? I am considering allowing a tenant to have a pet and she agreed to pay an extra $75 per month for this right, despite the fact that her lease prohibits pets.

This question addresses an unwritten rule in the San Francisco rent law regarding the ability to increase rent when a housing service is added after the tenancy has begun. Neither the ordinance nor the Rent Board’s rules and regulations specifically allow an increase in this circumstance. However, owners and tenants, along with their advisors, logically assume that when a tenant and landlord agree to add a service to the tenancy after the tenancy’s inception, a reasonable increase in rent is appropriate.

For example, sometimes a parking space or storage locker will become available years after the tenancy commenced, and the hopeful tenant may request that these facilities be included as part of the lease. While the rent law does not codify rules for increasing the base rent above allowable increments when such an amenity is added, no one would expect parking or storage to be rendered for free. As such, it is probably safe for an owner and tenant to agree upon a fair rental increase to reflect the tenant’s acquisition of the new benefit.

In the past, Rent Board judges have allowed modest increases in rent for the allowance of pets. However, the Board of Supervisors recently considered legislation that would officially allow owners to increase rent by a set amount as consideration for permitting pets, but tenant groups successfully opposed the measure. Given this current political backdrop, an owner may not always be able to adjust rent when acquiescing to pets.

The law expressly prohibits rent hikes for the addition of a roommate. In this instance, the landlord is simply waiving the ability to enforce a covenant in the rental agreement, such as a prohibition against subletting. The difference is that the letting of a garage or storage area is akin to physically expanding the rental unit, whereas the allowance of a roommate reflects a decision to relax enforcement of leasehold rules.

In the absence of legislative guidance, it is impossible to define every example where a rental adjustment would be allowed as opposed to instances when the tenant should not be subjected to an increase beyond the rent control guidelines. When seeking an increase for an added service, file a petition with the Rent Board. While there is no specific petition for increasing rent as a result of a new service post-inception of the tenancy, the standard request for rent increase forms can be modified. The Rent Board’s office also has information about new service rent increases. Failure to file a petition could conceivably enhance the tenant’s ability down the road to void the increase.

Consequently, be very careful about imposing new rent charges beyond the increases definitively allowed by law. Make sure that any fee for new rental space, like storage, parking, or additional living quarters, is mutually agreed upon by the tenant, and that the monthly charges for this gain is fair and reasonable. Finally, note that this new rent becomes part of the base rent and subject to rent increase limitations even if a separate lease agreement or addendum is signed. Moreover, the additional feature probably becomes non-severable, meaning the owner cannot, at a later time, unilaterally decide to take it back. In sum, be very cautious when expanding the tenancy and modifying the rent.

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