Landlords in San Francisco face unique issues due to the restrictions placed on them by the San Francisco Residential Rent Stabilization and Arbitration Ordinance, or commonly known as the Rent Control Ordinance. The majority of tenants in San Francisco are covered by the Rent Control Ordinance which limits the amount that landlords can increase a tenant’s rent each year and severely limits the landlord’s ability to terminate a tenancy (there are other restrictions but for practical purposes these are the two big issues).
The Rent Control Ordinance has changed the whole dynamics of the landlord – tenant relationship. Instead of valuing long term tenants, most landlords would prefer to have their units turnover every few years because vacant units are not covered by the rent ordinance. The landlord has the opportunity to increase the rent to fair market value when the unit becomes vacant. The longer the tenant has been living in a unit the lower their rent will be compared to fair market value thus the less valuable that tenant will be to the landlord.
Although rent controlled tenants enjoy lower rents, there are negatives for the tenant too under this system. Landlords are not likely to make unnecessary improvements to rent controlled units and oftentimes put off making improvements to the building as a whole. Repairs and maintenance are often kept to a bare minimum and cosmetic improvements such as new carpet and paint are rarely undertaken. Tenants can also suffer if one of their neighbors is creating a nuisance – playing loud music late into the night or other undesirable behavior. It is extremely difficult to evict a bad tenant that is bothering everyone else in the building as that tenant is protected by the Rent Control Ordinance too. Stephanie Gordon at Gordon Property Management in San Francisco has to advise her tenants that call in with complaints about other tenants that there is really very little that she can do to help the situation. Gordon Property Management will write letters to offending tenants and talk to them about their behavior but they cannot force bad tenants to behave. In this kind of situation the Rent Control Ordinance hurts everyone!
Roommate changes are an area of Rent Control in San Francisco where landlords should proceed with caution. The Rent Control Ordinance dictates that landlords must allow tenants to replace one roommate with another. However, Stephanie Gordon, San Francisco Property Manager advises that new roommates be treated as “unauthorized subtenants”. The landlord should not acknowledge the new roommate in any way – do not take an application, accept a rent check, or respond to the new tenant verbally or in writing. All requests for maintenance and repairs etc. should come only from tenants who are named on the lease agreement. The original tenants on the lease are considered “master tenants” and once all the “master tenants” have vacated the property the remaining unauthorized subtenants are not covered by much of the Rent Control Ordinance – thus allowing the landlord to raise the rent to fair market value. This may not seem important several months after signing a new lease but 3-5 years down the line it could be extremely important advises Stephanie Gordon of Gordon Property Management.
The San Francisco Rent Control ordinance with its master tenants, unauthorized sub tenants, and other rules can lead to many unintended and undesirable consequences for landlords who are not familiar with the Ordinance. Making even a small mistake could end up being a costly blunder. Becoming familiar with the Rent Control Ordinance is a must for all San Francisco landlords.
