AB 1482 vs SF Rent Control: Which Cap Applies?

Two rent-control systems can affect a San Francisco rental, but the first question is which one actually governs the unit. Older units covered by San Francisco’s local ordinance generally follow the local cap. Units outside local price control may instead fall under AB 1482, California’s statewide cap, unless a statutory exemption applies.

This article is general information, not legal, tax or lending advice. For your specific situation, consult the SF Rent Board, a qualified attorney, or your lender.

Key Takeaways

• San Francisco local rent control generally applies to qualifying multi-unit housing first occupied on or before June 13, 1979.
• The current SF annual allowable increase is 1.6% for March 1, 2026 through February 28, 2027.
• AB 1482 limits covered rent increases to the lower of 5% plus applicable CPI or 10%. For the San Francisco area, the current cap is 8.8% for August 1, 2026 through July 31, 2027.
• A property may be exempt from one rent-cap system but covered by another. For underwriting, coverage should be verified unit by unit before assigning a rent-growth assumption.

AB 1482 vs SF Rent Control: Which Law Governs the Unit?

The easiest mistake is to begin with the percentage.

The correct first question is whether the unit is subject to San Francisco’s local rent-control rules, AB 1482, or an exemption.

California Civil Code section 1947.12 expressly excludes housing that is already subject to a valid local rent or price-control law imposing a lower annual limit. That means AB 1482 does not simply sit on top of San Francisco’s local cap.

Where SF local rent control applies and imposes the lower limit, that local system governs the permitted annual increase.

Where local price control does not apply, AB 1482 may fill part of the gap, provided the unit is old enough and does not qualify for another statewide exemption.

The practical sequence is:

1. Determine whether the unit is covered by San Francisco local rent control.
2. If not, determine whether AB 1482 applies.
3. If AB 1482 does not apply, identify the exemption and retain the documentation supporting it.
4. Separately evaluate just-cause protections, because exemption from a rent cap does not automatically answer the eviction question.

For an investor asking, “Is my building rent controlled in SF?”, the building date is a starting point. It is not the entire diligence process.

San Francisco Rent Control Coverage

San Francisco’s local rent-control system generally applies to qualifying residential units that received their first certificate of occupancy on or before June 13, 1979.

The Rent Board advises owners and tenants to verify when the building was constructed and notes that many units built before June 14, 1979 can receive both rent-control and eviction protections.

For covered units, San Francisco calculates the annual allowable increase under its Rent Ordinance.

The current annual allowable increase is:

1.6% for increases effective March 1, 2026 through February 28, 2027.

That percentage applies to the tenant’s lawful base rent, subject to the other requirements of the Rent Ordinance.

Owners may also have unused allowable increases from prior years that can potentially be banked and imposed later under San Francisco rules. Those amounts should not be guessed from a seller’s spreadsheet. The lawful base rent and full increase history need to be reconstructed.

This is one reason San Francisco rent control coverage matters directly to acquisition underwriting. A model that assumes general market rent growth for a locally controlled tenancy can overstate forward NOI before the buyer has even reached the expense assumptions.

AB 1482: The Statewide Rent Cap

California Civil Code section 1947.12 limits annual increases for covered residential property to:

5% plus the percentage change in the applicable cost of living, or 10%, whichever is lower.

For increases taking effect in the San Francisco CPI area from August 1, 2026 through July 31, 2027, the current maximum under AB 1482 is 8.8%.

That is an important update from the prior period.

From August 1, 2025 through July 31, 2026, the San Francisco-area limit was 6.3%. As of August 1, 2026, the applicable figure reset to 8.8%.

AB 1482 does not create a permanent fixed percentage. The CPI component resets annually.

The statute also limits covered rent increases over a 12-month period and provides that, when the same tenant remains in occupancy, the gross rental rate may not be increased in more than two increments during that period.

The Rolling 15-Year Exemption

AB 1482 does not apply to housing that received a certificate of occupancy within the previous 15 years.

This is a rolling exemption.

It should therefore be checked against the actual certificate-of-occupancy date rather than simplified into a permanent construction-year cutoff.

A property exempt today because it is too new can later age into AB 1482 coverage.

That matters for long-hold underwriting. A five- or 10-year projection should not automatically assume the regulatory classification stays unchanged for the entire hold period.

Primary authority: California Civil Code §1947.12.

Costa-Hawkins Exemptions: Single-Family Homes and Condos

The Costa-Hawkins exemption is frequently discussed as if it means all single-family homes and condominiums are outside rent regulation.

The reality requires another step.

California Civil Code section 1954.52 generally restricts local governments from imposing rent control on certain categories of property, including qualifying units that are alienable separately from other dwelling units. That is the foundation for the familiar single-family-home and condominium exemption from local price controls.

But exemption from San Francisco’s local rent cap does not automatically mean exemption from AB 1482.

Under Civil Code section 1947.12, qualifying separately alienable property, commonly including individually owned single-family homes and condos, can also be exempt from the statewide cap when the statutory ownership conditions are met.

The owner generally cannot be:

• a real estate investment trust;
• a corporation; or
• an LLC with at least one corporate member.

The tenant must also receive the statutory written exemption notice.

This is where the ownership entity matters as much as the building type.

A condo owned by an individual may have a different AB 1482 result from a condo owned by a corporation.

The Exemption Notice Matters

Civil Code section 1947.12 requires qualifying owners relying on the separately alienable property exemption to give tenants the statutory exemption notice.

For newer or renewed tenancies, the required language must be included in the rental agreement as prescribed by the statute.

For underwriting, an owner should not simply mark a unit “AB 1482 exempt” because it is a condo or single-family home. The diligence file should establish:

• the property type;
• the ownership structure; and
• whether the required tenant notice was properly provided.

Just Cause Can Apply Even When a Rent Cap Does Not

Rent regulation and eviction protection are related, but they are not the same legal question.

California Civil Code section 1946.2 generally requires just cause after a tenant has continuously and lawfully occupied covered residential property for 12 months.

Where additional adult tenants are added before an existing tenant reaches 24 months of occupancy, the statute contains additional timing rules.

San Francisco has its own longstanding just-cause ordinance. The city has expressly stated that its local ordinance provides greater protections and applies instead of the state provision where the statutory requirements for local preemption are met.

So an owner should not assume:

No local rent cap = no just cause.

Nor should the owner assume:

AB 1482 rent-cap exemption = no eviction restrictions.

The rent-cap classification and the eviction-protection classification should be recorded separately during diligence.

Which Cap Applies? A Quick Decision Framework

Important: This table is a screening framework, not a legal determination. Verify status for each unit before using a rent-growth assumption.

What Classification Does to Your Underwriting

For an acquisition model, the regulatory classification belongs beside current rent, lease expiration, and unit condition.

It should not sit in a footnote.

Consider two units with the same $3,000 monthly rent.

If one is subject to San Francisco’s 1.6% current annual allowance and another is lawfully subject to the current 8.8% AB 1482 ceiling, the theoretical maximum increase under each regime is very different.

But even that comparison is not enough to build the pro forma.

A buyer still has to establish:

• the lawful current base rent;
• the tenant’s increase anniversary;
• any prior or banked increases;
• whether required notices and Rent Board filings were completed;
• whether the unit is actually exempt or covered;
• whether current rent includes concessions or separate housing services; and
• whether the modeled increase is commercially realistic, not merely legally possible.

This is why the rent-growth line in a San Francisco acquisition model should follow classification, rather than the other way around.

“The underwriting problem usually starts when a building-level assumption gets applied to every unit. In San Francisco, we want the file to tell us why each tenancy is classified the way it is before we assign growth to that income stream.”
Kelli Smith, Director of Rental Operations and Client Relations, BanCal Properties 

A misclassified unit can affect more than the next rent notice.

If projected rent growth is overstated, projected NOI is overstated. If NOI is overstated, the buyer may also overstate debt-service capacity or value.

That is a diligence problem, not simply a property-management problem.

Build the Rent-Growth Assumption From the Unit File

A disciplined acquisition review should classify every unit individually.

Start with the certificate-of-occupancy history and building type. Then move through the ownership structure, tenancy records, lawful rent history, exemption notices, Rent Board records, and increase history.

BanCal’s San Francisco Rent Roll Audit framework is designed around exactly this issue: verifying the status and income behind each line of the rent roll rather than accepting the scheduled rent as evidence.

For locally controlled units, the Banked Rent Increases in San Francisco guide explains why historical unused increases also need documentation before they are treated as future income.

The SF Rent Board Housing Inventory and Rent Increase License is another diligence point. A rent-controlled unit may have a mathematically correct increase that still cannot be relied on if the required licensing and reporting were not in place when the increase was imposed.

For an investor, the purpose of that review is simple.

Do not ask only, “What rent could this building achieve?”

Ask:

Which units can lawfully move, by how much, on what timeline, and what documents support the assumption?

That produces a more defensible underwriting model than applying one rent-growth percentage across the asset.

Frequently Asked Questions