Quick Answer
On a covered unit, Cal. Civ. Code § 1947.12 measures your rent cap against the lowest gross rental rate you charged for that unit at any time in the 12 months before the increase. The rent you set at move-in therefore becomes the base for every later increase. Before you list a unit, keep a dated record of the comparable rentals you used to set the price. Rules last checked October 2, 2026.
Key Takeaways
- Your starting rent is your baseline. Each cap is measured against the lowest rent you charged in the prior 12 months (§ 1947.12).
- The cap is the lesser of 5% plus regional CPI or 10%. For increases effective August 1, 2026 through July 31, 2027, published regional limits run from 8.1% to 8.8%.
- A dated comp record is a good habit, not a statutory duty. Many owners save three active and three recently leased comparable rentals near the unit on the listing date.
- Check how a one-time credit is treated. The statute speaks of the “gross rental rate” and does not address move-in credits by name, so confirm the treatment with your attorney before you rely on it.
- Exempt units still need the notice. A single-family home or condominium is exempt only when the owner qualifies and your tenant has the written exemption notice.
1. The Baseline Rule
Under California Civil Code § 1947.12, you may not raise the gross rental rate on a covered unit by more than 5% plus the percentage change in the cost of living, or 10%, whichever is lower, measured against the lowest gross rental rate you charged for that unit at any time during the 12 months before the increase. A lower starting rent therefore lowers the ceiling for each later increase while your tenant stays.
The regional limits and exemptions are set out in the AB 1482 rent cap guide.
2. A Worked Comparison
Take a unit with a market rent of $3,000 a month in the Los Angeles area, where the published limit for August 1, 2026 through July 31, 2027 is 8.7%.
- Option A, cut the base rent to $2,800: Year 1 rent paid is $33,600. The most you may charge after one increase is $2,800 × 1.087 = $3,043.60 a month.
- Option B, hold $3,000 and give a $2,400 one-time credit: Year 1 rent paid is also $33,600 ($36,000 minus $2,400). The most you may charge after one increase is $3,000 × 1.087 = $3,261.00 a month, which is $217.40 a month more than Option A.
If you raised the rent to the maximum every year at 8.7%, Option B would bring in about $11,900 more over years 2 through 5. This example assumes the limit stays at 8.7% and that your attorney confirms the credit does not lower your baseline rent.
3. What to Keep in Your Comp Record
This checklist is a practice suggestion, not a statutory requirement:
- Dated comparable rentals: three active and three recently leased listings near the unit, with bedroom count, square footage, and amenities, saved on the date you set the rent.
- The regional limit in effect: the published figure for your county on the date of each increase.
- Your lease and any credit addendum: the full contract rent, plus a signed addendum that describes any credit as one-time.
- The exemption notice, if you rely on one: the written notice your tenant received.
4. Questions Owners Ask
Does AB 1482 apply to single-family homes and condominiums? Not when the owner is not a REIT, a corporation, or an LLC with a corporate member, and your tenant has the written exemption notice described in § 1947.12(d). Without the notice, treat the unit as covered.
Can I advertise a free month without lowering the base rent? Many owners do. State the full contract rent in the lease and describe the free month in a signed addendum as a one-time credit. The statute does not mention concessions, so ask your attorney how a credit interacts with your baseline.
What if an increase goes above the limit? An increase above the limit is not permitted under § 1947.12. Ask your attorney about your options before you serve a corrected notice.
What This Guide Does Not Cover
This guide covers how your starting rent interacts with the cap under California Civil Code § 1947.12. It describes what the statute says as of the check date above, does not value property, and does not predict how a court will rule on your facts.
It does not cover:
- City rent stabilization ordinances with lower limits, such as those in San Francisco, Los Angeles, Berkeley, and Santa Monica.
- Deed-restricted affordable housing and Section 8 administrative rules.
- Commercial and mixed-use leases.