Many Oakland tenants in rent-controlled apartments will soon face the highest annual rent increases they’ve ever experienced.
The city of Oakland this week announced that landlords can raise rents by 6.7% starting in July. That means the rent for a $2,000-a-month apartment could be raised to $2,134, for example.
Since 2002, Oakland has based its annual allowed rent increases on the regional consumer price index (CPI), or inflation. Until now, the highest increase permitted under this system was 3.6% in 2003. Last year, the rate was 1.9%.
But the nation’s robust economic recovery following the brief pandemic recession paired with global supply-chain problems has caused the highest rate of inflation in decades.
In Oakland, most residential buildings constructed before 1983 are covered by rent control, aside from single-family homes and a few other exceptions. When new tenants move into rent-controlled units, the landlord is allowed to set the rent at whatever price they choose. But from then on, they can only raise the rent once a year by the CPI rate or less.
There are some cases where landlords can impose a higher increase, up to three times the CPI rate, such as by passing certain renovation costs onto tenants, or by “banking” several years of allowable increases and implementing them all at once. However, the current COVID-19 eviction moratorium in Oakland prohibits any increases above the CPI rate.
Mark Dias, co-chair of the Oakland Tenants Union said he was “astonished” to see the 6.7% allowable rent increase.
“It’s not like we’re coming out of COVID—it’s all around us,” he said. “If tenants weren’t able to financially recover from that period of time, they’re also going to be hit with an increase that is legal.”
Dias said his own landlord consistently raises his rent annually by the maximum amount permitted, so he “did the numbers” and is preparing for a significant spike.
Even if the 2023 rate returns to a low figure, that new percentage will be applied to a base rent already increased by 6.7% the year before.
“It has huge cascading effects down the line, because the base rent will be so much higher,” said Emily Wheeler, another OTU member.
But one former Oakland landlord said the 6.7% allowable increase will “help offset some of the additional costs” of running a rental property these days.
Lynn Batte just sold the Oakland rental house she owned after a problematic tenant left her with $18,000 in damages to the property and $7,000 in unpaid rent, she said.
“Goods are going up, services are going up, but there’s still this moratorium for renters,” Batte said.
But as a former renter herself, she said she sympathizes with the tenants who’ve experienced financial hardship during the pandemic. The 6.7% increase is an “eye-opener,” she said. “It adds an enormous amount of stress, especially to the elderly and people who have disabilities.” Batte said the city should subsidize housing for more of its residents and require developers to include more affordable units, while still allowing small property owners like her to make a decent income.
Some tenant advocates are urging a policy change to lessen the impact of this year’s 6.7% increase on Oakland renters.
One idea being floated is freezing rents for the year, said Leah Simon-Weisberg, legal director for the renter advocacy organization ACCE.
“Another thing the city could do is look at changing the formula they use” for rent increases, she said. “There’s a lot of criticism about how they even determine CPI.”
In Berkeley, where Simon-Weisberg serves on the Rent Board, landlords can raise rents by 65% of the CPI, not 100% like in Oakland. Simon-Weisberg said this is because CPI is calculated by looking at the rising costs of consumer goods, including housing. From her view, it’s like charging tenants double for housing if their rent increase is based on the rising cost of housing.
And as costs have risen, “the average person’s salary has not gone up” by an equivalent amount, she said. Basic necessities like food and gas have seen the largest cost increases, so low-income residents have experienced the sharpest impacts of inflation, NPR has reported.
Oakland has a rental assistance program for tenants who’ve become unable to pay their housing costs during the pandemic, but the demand has been so high that the city has waitlisted everyone who has applied for funds since January.
In Oakland, the CPI rate also affects many renters in units not covered by the local rent control ordinance, such as tenants in newer buildings or single-family houses owned by corporations. That’s because a 2019 statewide rent law limited increases in most residential buildings built more than 15 years ago that aren’t covered by local rent control.
Owners of those properties can raise rents annually by 5% plus the CPI, up to 10%. This year, with a CPI of 6.7%, that 10% threshold will be reached for the first time.