California’s statewide rent cap, created by AB 1482 and codified at Civil Code Section 1947.12, limits most annual rent increases to 5% plus the change in the regional Consumer Price Index, with a hard ceiling of 10% no matter how high local inflation runs.

The formula sounds simple until you’re the one applying it, because the CPI figure that plugs into it changes by region and resets every August 1 — and getting it wrong is the kind of mistake that surfaces as a tenant dispute right when you’re trying to sell.

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The Formula: 5% Plus Regional CPI, Capped at 10%

Civil Code Section 1947.12 prohibits a covered landlord from raising rent, in any 12-month period, by more than 5% plus the percentage change in the cost of living for the region where the property sits, as measured by the applicable regional Consumer Price Index published by the U.S. Bureau of Labor Statistics — or 10% total, whichever figure is lower.

The statute runs on an annual cycle that starts August 1 and runs through July 31 of the following year, using the April-to-April CPI change for the relevant metro region to set that year’s maximum.

A landlord is also limited to two rent increases within any 12-month period, and the combined total of those increases still can’t exceed the statutory cap for that period.

Why the Same Law Produces a Different Number in Different Counties

The formula is identical everywhere in California — 5% plus CPI, capped at 10% — but the CPI figure it plugs in is regional, not statewide, so the actual maximum increase varies depending on where the rental sits.

A property in the Los Angeles-Long Beach-Anaheim metro area uses that region’s CPI-U figure; a property in the Riverside-San Bernardino-Ontario metro area uses a different one; a property in the San Francisco-Oakland-Hayward region uses yet another.

For the cycle running August 1, 2025 through July 31, 2026, landlords and tenants in several regions were working from a cap in the roughly 6% to 7% range once that year’s CPI figure was added to the statutory 5%.

Because the BLS updates these regional indices every spring and the new figure takes effect each August 1, the specific maximum for any given property has to be checked against the current cycle’s published number rather than assumed from a figure you saw last year or read somewhere online.

Where to Actually Find the Current Cycle’s Published Number

Knowing the formula doesn’t help much if you can’t locate the figure that plugs into it.

The California Department of Housing and Community Development publishes a reference table each year listing the regional CPI percentage for every metro area the statute covers, updated once the new figures take effect on August 1.

That table is the authoritative source landlords and attorneys actually cite — not a blog post repeating last year’s number, not a property management company’s rounded estimate, and not a figure remembered from the prior cycle.

Because the table changes every year and the regions themselves follow federal metropolitan statistical area boundaries rather than county lines, a property near the edge of two regions can sometimes sit in a different CPI area than a landlord assumes from the city name alone, which is one more reason to confirm the specific figure for the specific property rather than working from a number used elsewhere in the portfolio.

A Worked Example of the Formula in Practice

The arithmetic is straightforward once you have the right CPI figure in hand. Say a unit in the Los Angeles-Long Beach-Anaheim metro area is renting for $2,000 a month, and the applicable cycle’s regional CPI change comes in at 3.5%.

The statutory formula allows 5% plus that 3.5%, for a combined 8.5% — under the 10% hard ceiling, so the full 8.5% applies. Eight and a half percent of $2,000 is $170, meaning the landlord can raise the rent to $2,170 for that 12-month period.

If that same region’s CPI figure had instead come in at 6%, the formula would call for 11% (5% plus 6%), but the 10% ceiling caps it there regardless — a $200 increase on that same $2,000 unit, not $220.

A landlord who skips the ceiling check and applies the uncapped formula number ends up overcharging by the difference, which is exactly the kind of error that surfaces later as a recoverable overcharge claim.

The two-increases-per-12-months rule works the same way on a combined basis.

A landlord could raise rent by 4% six months into the cycle and another 4.5% six months later, for a combined 8.5% — fine under the example above — but couldn’t follow an 8.5% increase with a second increase later in the same 12-month window, since the two together would exceed the cap.

Each new 12-month period resets the count, but the clock runs from the date of each individual increase, not from the start of the tenancy, which is a detail that trips up landlords trying to reconstruct a multi-year rent history after the fact.

Which Residential Properties Sit Outside the Law Entirely

Beyond the deed-restricted, dormitory, shared-facility, new-construction, and single-family exemptions already covered, Section 1947.12 and its companion statute carve out several other categories of housing from the rent cap altogether.

Transient and tourist hotel occupancy is exempt, as is housing accommodation in a nonprofit hospital, religious facility, extended care facility, or licensed residential care facility for the elderly, and an adult residential facility.

Mobilehomes are generally governed by the separate Mobilehome Residency Law rather than Section 1947.12, which is its own distinct statutory scheme with its own rent and notice provisions.

None of these exemptions is automatic in the sense of requiring no analysis — each has its own statutory definition, and a property that looks like it might fit one of these categories still needs that specific definition checked against the facts before anyone relies on it.

The Separate Notice Period a Rent Increase Still Has to Satisfy

Section 1947.12 caps how much a landlord can raise the rent; it doesn’t set how much advance notice a tenant has to receive before that increase takes effect.

That notice requirement lives in a different statute, Civil Code Section 827, and it runs on its own separate logic: if the rent increase, combined with any other increases in the preceding 12 months, totals 10% or less of the rent charged at any time during that 12 months, the landlord owes the tenant 30 days’ written notice before the increase takes effect; if the combined total exceeds 10%, the landlord owes 90 days’ notice instead.

Because AB 1482 already caps most covered increases at 10%, the 30-day notice period ends up applying to the typical covered increase — but a landlord relying on a property that’s exempt from the rent cap itself, and therefore free to raise rent by more than 10%, still has to clear the 90-day notice threshold under Section 827 for that larger increase, separately from whatever the cap analysis concluded.

What’s Exempt From the Statewide Cap

Section 1947.12 exempts several categories of housing from the rent cap entirely.

Housing restricted by a recorded deed, regulatory agreement, or other document as affordable to low or moderate-income households is exempt, as are dormitories operated by an institution of higher education, and a property where the owner shares a bathroom or kitchen with the tenant.

New construction is exempt for its first 15 years, measured from the date the certificate of occupancy was issued — a rolling exemption rather than a fixed calendar cutoff, so a building’s exemption actually expires on a different date depending on exactly when it was certified for occupancy.

The exemption that generates the most confusion is the single-family home carve-out.

A single-family home or condominium that’s alienable separate from title to any other unit is exempt from the rent cap if the owner is not a real estate investment trust, a corporation, or an LLC with at least one corporate member — and only if the tenant has been given specific written notice of the exemption, included in the lease for any tenancy starting after July 1, 2020.

Skip that written notice and the property doesn’t get the exemption even if it would otherwise qualify on ownership structure alone.

We’ve covered what this single-family exemption does and doesn’t cover in more detail separately, since it’s the exemption landlords most often assume applies when it actually doesn’t.

How Local Rent Ordinances Interact With the State Cap

AB 1482 sets a statewide ceiling, not a statewide floor, which means a city with its own, stricter rent control ordinance isn’t preempted — the lower of the two caps controls.

San Francisco’s local ordinance, for example, has historically limited increases to a percentage of CPI that comes out well below AB 1482’s 5%-plus-CPI formula, so covered San Francisco units follow the city’s tighter number rather than the state’s looser one.

The reverse situation also exists: in a city with no local rent ordinance at all, AB 1482’s statewide cap is the only ceiling that applies, full stop.

Before relying on the state formula for any specific property, it’s worth confirming whether the city it sits in has adopted its own rent stabilization ordinance that sets a lower number — we’ve covered how this plays out for small landlords inside the City of Los Angeles, where a separate local ordinance runs alongside the state cap.

The Just-Cause Companion Rule, and Why It’s a Separate Statute

AB 1482 is frequently discussed as a single law, but it actually created two separate Civil Code sections that work together: Section 1947.12, the rent cap covered here, and Section 1946.2, which requires just cause for ending a covered tenancy once a tenant has occupied the unit for 12 months.

We’ve broken down what Section 1946.2 actually requires separately, including the specific statement of cause a termination notice has to contain.

The two statutes share most of the same exemptions, but they answer different questions — one caps how much rent can go up, the other limits when and why a tenancy can be ended — and a property can be exempt from one without automatically being exempt from the other, depending on exactly how the exemption’s conditions are met.

Penalties for Overcharging

A tenant who’s been charged rent above what Section 1947.12 allows can sue to recover the overcharge, and a landlord who violates the statute willfully, fraudulently, or with oppression can be liable for damages well beyond the simple refund of the excess rent collected — the statute doesn’t treat an overcharge as a minor billing correction once it’s litigated.

For a landlord who raised rent based on a stale CPI figure, or who assumed a single-family exemption applied without having given the required written notice, the exposure isn’t limited to giving back the difference going forward; it can reach back over however long the overcharge continued.

A tenant doesn’t have to wait until move-out to raise the issue either; an overcharge claim can surface the moment a tenant compares their increase notice against the published CPI figure for that cycle, which means the exposure is live well before any sale is contemplated, not just a risk that gets discovered during a buyer’s due diligence.

The Law Has a Sunset Date

AB 1482 took effect January 1, 2020, and as originally written it is set to repeal on January 1, 2030, unless the Legislature acts to extend or make it permanent before then. That matters less for a sale happening in the near term than it does for anyone holding a rental long-term, but it’s a detail worth knowing rather than assuming the current rules are fixed indefinitely.

What This Means If You’re Selling a Rental

A buyer taking on a tenant-occupied property inherits the lease at whatever rent is currently in effect, and if that rent was increased incorrectly — too much, too often, or without the paperwork an exemption requires — the buyer inherits that exposure too, not just the seller.

Before listing a rental, it’s worth confirming the last rent increase was calculated against the correct region’s CPI figure for the cycle it was issued in, that any claimed exemption actually has the required written notice in the lease, that the 30-day or 90-day notice period under Section 827 was actually satisfied, and that the two-increases-within-a-rolling-12-month-period rule wasn’t exceeded.

A buyer’s attorney, or a tenant’s attorney after closing, can and does check this, and a lender financing the purchase may ask for the same documentation before funding if the appraisal relies on the in-place lease income.

None of this requires an advanced legal background to check — it requires the actual records: every rent increase notice ever sent for the tenancy, the CPI figure in effect for each cycle those notices fell under, and, if an exemption was ever claimed, the lease language proving the required notice was given.

A landlord who has kept that paperwork from day one can usually confirm compliance in an afternoon.

A landlord who’s owned the property for a decade across several rent increases, possibly under a prior property manager, and without a complete file, is looking at real reconstruction work before a conventional sale can close cleanly.

When a Cash Sale Is the Wrong Choice

If the rent history is clean, every increase was calculated correctly, and any exemption claimed is properly documented, a conventional sale to a landlord buyer or even an owner-occupant willing to honor the lease will generally bring a better price than a direct cash sale — a compliant rent roll is an asset buyers will pay for, not a liability they’re pricing around.

A direct sale tends to make more sense when the rent history has gaps or outright errors that would take real time and legal help to untangle before a conventional buyer’s attorney would sign off; when a tenant dispute over a past increase is already brewing and you’d rather not inherit the resolution of it as the listing seller; or when you simply don’t have the records to prove the rent charged today was calculated correctly going back through however many increases have happened since the tenancy began.

First Steps

Identify the correct CPI region for the property’s location and the cycle (August 1 to July 31) each past increase fell under
Check whether the city the property sits in has its own rent ordinance that sets a lower cap than the state formula
Confirm any claimed exemption has the written notice the statute actually requires, in the lease itself
Verify no more than two increases occurred in any rolling 12-month period and that their combined total stayed within the cap

Reconstructing a rent history against the right CPI figures, year by year, is tedious even when nothing was done wrong. If you’d rather sell a rental and let an experienced buyer sort through the lease history, Cash Home Buyers CA can make a no-obligation cash offer on an occupied property, and our rental property page has more on how we handle an occupied sale.

You can also find us on our Google Business Profile.

California’s AB 1482 Rent Cap: How the 5% Plus CPI Formula Actually Works