Each year, California’s Tenant Protection Act (AB 1482) sets new limits on how much landlords of “non-exempt” residential properties may raise rent, and each summer brings an updated figure based on the latest consumer price index data. For property owners and investors throughout Los Angeles and Ventura County, understanding these changes, along with the exemptions that may apply to your property, is essential to staying compliant and protecting your investment.
How the Statewide Rent Cap Formula Works
Under the Tenant Protection Act, landlords of non-exempt residential units may raise rent annually by no more than five percent plus the applicable regional consumer price index, with an absolute ceiling of ten percent regardless of how high inflation runs. The relevant CPI figure varies by region and is announced each year in mid-June, giving landlords a narrow window to serve the required thirty day notice before any new rent increase can take effect on August 1.
As an example of how this plays out, San Luis Obispo and Santa Barbara Counties saw their regional CPI come in at 3.6 percent this year, bringing the maximum allowable increase for non-exempt properties in that region to 8.6 percent, effective August 1, 2026 through July 31, 2027. That figure has shifted considerably over the past several years, from a high of 10.0 percent in 2022 (when inflation exceeded 5 percent) down to 7.7 percent the following year, illustrating just how much these caps can move from one cycle to the next.
Because CPI is calculated regionally, landlords with properties in the Greater Los Angeles and Ventura County area should confirm the specific consumer price index applicable to their property’s location rather than assuming a statewide flat rate. This is one of the many details our team tracks closely on behalf of the owners and investors we work with.
Why “Exempt” Versus “Non-Exempt” Status Matters
Not every rental property in California falls under these rent increase caps. Properties that qualify as “exempt” from the Tenant Protection Act carry two significant advantages for owners. First, rent may be raised by an unlimited amount, provided at least ninety days notice is given for increases exceeding ten percent. Second, exempt property owners are not required to establish “just cause” to terminate a tenancy, which offers considerably more flexibility than what non-exempt owners face.
Several categories of exemption are worth understanding for any investor evaluating a property’s rent control status.
Single family home exemption. The most commonly encountered exemption applies to housing that is alienable separate from the title of any other dwelling unit, such as a standalone single family home or condominium, and is owned by an individual, a trust, or an LLC with no corporate members. Critically, this exemption must also be properly disclosed to the tenant within the lease or rental agreement itself. All three conditions must be met simultaneously. We frequently encounter older lease agreements, particularly those signed prior to the Tenant Protection Act’s 2019 enactment, that satisfy the ownership and title requirements but were never updated to include the required disclosure language. Meeting two of the three conditions is not sufficient, and a missing disclosure can unexpectedly convert what an owner assumed was an exempt property into a non-exempt one.
New construction exemption. Properties that received a certificate of occupancy within the previous fifteen years are generally exempt, with the exception of mobile homes. This exemption operates on a rolling basis, meaning a property built in 2010 remained exempt through 2025 but became non-exempt in 2026. Owners of newer construction should mark their calendars accordingly, since the transition to non-exempt status happens automatically and without any formal notice.
Duplex owner-occupancy exemption. A narrower exemption applies to duplexes in which the landlord occupies one of the two units as a principal residence from the start of the tenancy through its duration, provided neither unit is an accessory dwelling unit or junior accessory dwelling unit.
Why This Matters for Buyers, Sellers, and Investors Alike
For anyone purchasing an income property in Los Angeles or Ventura County, verifying a property’s exempt or non-exempt status before closing can significantly affect projected returns and future flexibility with tenants. Sellers of investment property should also be prepared to disclose this status accurately, as it directly impacts how a buyer will underwrite the deal. Overlooking a missing disclosure, an aging new construction exemption, or a misunderstood duplex arrangement can lead to costly surprises well after a transaction closes.
If you are considering buying or selling investment property in Calabasas, Woodland Hills, Thousand Oaks, Sherman Oaks, Encino, Studio City, Simi Valley, the Westside, or anywhere throughout our service area, and want a clearer picture of how these regulations affect your specific property, Allen Brodetsky and the team at Boutique Realty are here to help. With over $250 million in total sales since 2004 and deep experience working alongside attorneys, CPAs, and estate trustees on complex transactions, we understand how rent control status factors into a sound investment decision.
Contact Boutique Realty today at (818) 696-4498 to discuss your property.