Santa Monica Rent Control for Property Owners

Santa Monica enacted its Rent Control Charter Amendment in April 1979, making it one of the oldest and strictest rent control jurisdictions in California. The law was a direct response to rapidly rising rents and low vacancy rates in the late 1970s, and it has shaped the city's rental market ever since.

The law applies to residential rental units in buildings that received a certificate of occupancy before April 10, 1979. This covers the majority of apartment buildings in Santa Monica, including duplexes, triplexes, and larger multifamily properties. If your building was built before that date and contains rental units, it is almost certainly covered.

The Santa Monica Rent Control Board administers the program. The Board is an independent body with its own staff, legal counsel, and enforcement authority. It operates separately from the City Council, which means rent control policy in Santa Monica is unusually insulated from typical city politics.

Exempt Properties

Not every rental property in Santa Monica falls under rent control. The following are generally exempt:

• Buildings with a certificate of occupancy issued on or after April 10, 1979
• Single family homes and condominiums (exempt under Costa Hawkins, though AB 1482 may still apply)
• Government subsidized housing where rents are set by a regulatory agreement
• Units in hospitals, convents, monasteries, and extended care facilities
• Dormitories owned and operated by educational institutions
• Properties where the owner shares kitchen or bathroom facilities with the tenant

If you own a newer building (post 1979) in Santa Monica, you are not subject to local rent control, but you may still be covered by AB 1482 at the state level. More on that later in this guide.

Every year, the Santa Monica Rent Control Board sets a maximum allowable rent increase that landlords can impose on existing tenants. This is the single most important number in your annual operating budget for a rent controlled building.

For the 2025 to 2026 period (effective September 1, 2025 through August 31, 2026), the general adjustment is 2.3%, with a hard cap of $60 per month. That means if 2.3% of a tenant's current rent exceeds $60, the landlord can only increase the rent by $60.

How the Board Calculates the Increase

The annual increase is tied to a percentage of the Consumer Price Index (CPI) for the Los Angeles area. The Board reviews the CPI data and sets the general adjustment each year, typically announcing it in the spring for the period beginning September 1. The percentage is not a straight pass through of CPI. The Board applies its own formula, and the resulting increase has historically been lower than the full CPI increase.

Historical Maximum Allowable Increases

To give you a sense of the trend, here are recent annual general adjustments:

As you can see, the increases are modest. Over the past six years, a landlord's ability to grow rental income on occupied units has been extremely limited. This is one of the core reasons why vacancy turnover is so important in a rent controlled building.

Individual Rent Adjustments

If you believe the general adjustment does not provide a fair return on your investment, you can petition the Rent Control Board for an individual rent adjustment. This requires detailed financial documentation showing your operating expenses, debt service, and the income the property is generating. These petitions are fact intensive and can take months to resolve. Many owners find it more practical to wait for natural turnover and reset rents under vacancy decontrol rather than going through the petition process.

Santa Monica has some of the strongest tenant protections in the state. You cannot simply choose not to renew a lease or terminate a month to month tenancy without a legally recognized reason. Every termination must fall into one of the just cause categories defined in the rent control law.

Permitted Reasons for Eviction

• Nonpayment of rent: The tenant has failed to pay rent after proper notice.
• Lease violation: The tenant has violated a material term of the rental agreement and failed to cure after notice.
• Nuisance: The tenant is causing a nuisance or disturbance that interferes with other tenants' quiet enjoyment.
• Illegal use: The tenant is using the unit for illegal purposes.
• Refusal to renew lease: The tenant refuses to sign a new lease with substantially the same terms as the expiring lease.
• Refusal to provide access: The tenant refuses to allow the landlord reasonable access for necessary repairs or inspections.
• Owner move in: The owner (or a qualifying family member) intends to occupy the unit as their primary residence. Specific restrictions and relocation payments apply.
• Ellis Act withdrawal: The owner is permanently removing all units in the building from the rental market. Significant relocation payments and restrictions apply.

Required Notices

The type and length of notice depends on the cause. Nonpayment of rent requires a 3 day notice. Most lease violations require a notice to cure or quit. Owner move in and Ellis Act evictions require longer notice periods (typically 60 to 120 days) plus specific disclosures to the Rent Control Board. Every notice must be properly served and documented. The Rent Control Board reviews eviction filings, and procedural errors can invalidate the entire process.

Relocation Payments

For no fault evictions (owner move in, Ellis Act, major renovation), Santa Monica requires landlords to pay relocation assistance to displaced tenants. As of early 2026, base relocation payments range from approximately $23,000 to $24,000 per unit. Additional payments are required for:

• Elderly tenants (age 62 or older): additional $4,000 to $5,000
• Disabled tenants: additional $4,000 to $5,000
• Families with minor children: additional $4,000 to $5,000
• Tenants who have lived in the unit for 15+ years: additional amounts may apply

These amounts are adjusted annually. For a building with multiple long term tenants, relocation costs can be substantial. Factor these costs into any decision involving no fault evictions. Consult with your attorney for current relocation payment amounts and requirements.

Every rental unit in a building subject to Santa Monica rent control must be registered with the Rent Control Board. This is not optional, and it is not a one time filing. Registration is renewed annually.

Annual Registration Fee

The Rent Control Board charges an annual registration fee per unit. As of early 2026, the fee is approximately $264 per unit per year, split between the landlord and tenant. The landlord's share is roughly $132 per unit, and the tenant's share (which the landlord collects as part of rent) is roughly $132 per unit. These fees fund the Rent Control Board's operations.

What the Board Tracks

The Rent Control Board maintains detailed records for each registered unit, including:

• The base rent (the rent in effect at the time of initial registration)
• All approved rent increases and their effective dates
• Current tenant information
• Any capital improvement surcharges
• Eviction filings and outcomes

Penalties for Non Compliance

Failing to register your units or falling behind on registration fees creates real problems. The Board can impose penalties and fines. More importantly, if you attempt to evict a tenant from an unregistered unit, the lack of registration can be used against you in court. And if you decide to sell your building, any registration gaps will surface during buyer due diligence and can delay or complicate the transaction.

Bottom line: keep your registration current. It costs relatively little compared to the headaches that come from falling out of compliance.

Vacancy decontrol is arguably the most important concept for owners of rent controlled buildings to understand. It is the primary mechanism through which you can grow rental income and build property value over time.

Here is how it works: when a tenant in a rent controlled unit voluntarily vacates (moves out on their own, not through eviction), the landlord can set the rent for the next tenant at any amount. There is no cap, no board approval, no ceiling. You rent the unit at whatever the market will bear.

Once the new tenant moves in, that market rate rent becomes the new base rent for that unit. Going forward, annual increases are again limited to the maximum allowable percentage set by the Rent Control Board.

Why This Matters for Owners

In a building where long term tenants are paying $1,200 per month for a unit that would rent for $2,800 on the open market, each turnover represents a potential $1,600 per month increase in income, or $19,200 per year. At a 5% cap rate, that single unit turnover adds roughly $384,000 to the building's value.

This is why turnover rate is one of the most closely analyzed metrics when investors evaluate rent controlled buildings. A building with five units renting well below market has enormous embedded upside, but that upside only materializes when tenants move out voluntarily.

Costa Hawkins Protection

Vacancy decontrol is guaranteed by the Costa Hawkins Rental Housing Act, a 1995 state law that prevents cities from restricting what a landlord can charge a new tenant after a vacancy. There have been multiple ballot initiatives attempting to repeal Costa Hawkins (Proposition 10 in 2018, Proposition 21 in 2020), and all have failed. As long as Costa Hawkins remains in effect, vacancy decontrol is protected statewide.

When you make significant capital improvements to a rent controlled building, Santa Monica allows you to recoup a portion of those costs through a temporary surcharge added to tenants' rents. This is called a capital improvement pass through.

What Qualifies

Qualifying improvements are generally building wide capital expenditures that extend the useful life of the property or bring it into code compliance. Common examples include:

• Roof replacement
• Plumbing or electrical system upgrades
• Seismic retrofitting
• New windows
• Common area renovations (lobby, hallways, landscaping)
• Security systems and lighting
• Water heater replacement

Cosmetic improvements to individual units (paint, fixtures, appliances) generally do not qualify for a pass through. Those are typically recovered by resetting the rent to market when the unit turns over.

The Application Process

To pass costs through, you must apply to the Rent Control Board with documentation of the improvement, including invoices, permits, and proof of completion. The Board reviews the application, determines the qualifying costs, and calculates the allowable monthly surcharge per unit. The surcharge is amortized over the useful life of the improvement (typically 10 to 20 years depending on the type of work), and there are limits on how much can be passed through per month.

The process takes time, and approval is not automatic. Many landlords find it worthwhile for large expenditures like seismic retrofits or roof replacements, but less practical for smaller projects.

This is the question every owner asks: is my building worth less because of rent control? The answer is nuanced.

The Impact on NOI

Apartment buildings are valued primarily on their income. The cap rate formula (Value = NOI / Cap Rate) means that anything suppressing your net operating income directly reduces your property's value. A building where most tenants are paying below market rents will produce lower NOI than the same building at market rents, and its current value reflects that lower income.

Consider a 10 unit building where market rent would be $3,000 per unit, but the average rent roll is $1,800 per unit because of long term tenants. That building produces $216,000 in gross annual rent instead of $360,000. At a 5% cap rate (after expenses), the difference in value can be $1 million or more.

The Upside Argument

Here is where it gets interesting. That same building with below market rents has embedded upside. Every time a below market tenant moves out, the landlord resets the rent to market. A buyer looking at that building sees future income growth without needing to do anything except wait for natural turnover.

This is why value add buyers pay attention to the delta between current rents and market rents. A building with a large rent gap is not just a building with suppressed income. It is a building with a built in growth trajectory.

Cap Rate Implications

Buyers in Santa Monica typically underwrite rent controlled buildings using two metrics: the current cap rate (based on actual rents) and the pro forma cap rate (based on projected rents after turnover). A building trading at a 3.5% cap rate on current income might underwrite to a 5.5% cap rate once all units turn over to market. The buyer's purchase price reflects a blended view of where the building is today and where it will be in 5 to 10 years.

As of early 2026, Santa Monica multifamily cap rates generally range from 4.85% to 5.25%. Properties with significant below market rents may trade at lower cap rates on current income because buyers are pricing in the upside.

What This Means for You

If you own a rent controlled building with long term tenants, your property is likely worth more than you think, but less than it would be at market rents. The key is understanding the gap and how quickly it can close through natural turnover. A broker who specializes in rent controlled multifamily can model this for you and show you where your building sits on the value spectrum.

Selling a rent controlled building in Santa Monica is not the same as selling a market rate property. Buyers are underwriting the rent roll, the registration history, and the regulatory environment. Here is what you need to know.

What Buyers Look For

Sophisticated multifamily buyers in Santa Monica focus on several things when evaluating a rent controlled building:

• Current rent roll: what is each unit paying today versus market?
• Tenant tenure: how long has each tenant been in place? Longer tenure usually means lower rents but also less near term turnover.
• Registration compliance: are all units properly registered with the Rent Control Board? Any gaps or issues?
• Eviction history: has the building had any contested evictions or Rent Control Board complaints?
• Physical condition: what capital expenditures are coming? Seismic retrofit, plumbing, roof, SB 721 balcony compliance?
• Unit mix: larger units and units with desirable features (parking, laundry, updated kitchens) command higher rents on turnover.

Due Diligence on the Rent Roll

The rent roll is the most scrutinized document in any multifamily sale, and doubly so in a rent controlled building. Buyers will verify each unit's current rent against the Rent Control Board's records. They will check whether every increase was properly noticed and implemented. They will look for any units where the rent may have been raised above the maximum allowable amount (which can trigger rollbacks and penalties). Clean, well documented rent rolls speed up due diligence and build buyer confidence.

Estoppel Certificates

In a Santa Monica rent controlled building sale, Estoppel certificates are a standard part of closing. An Estoppel certificate is a signed statement from each tenant confirming their current rent, lease terms, and any deposits held. The Rent Control Board also issues its own certificate confirming the registration status of each unit. These documents protect the buyer by confirming that the rent roll is accurate and that there are no undisclosed disputes or claims.

If you are thinking about selling, getting your Estoppel certificates in order before going to market can save weeks during escrow.

The Ellis Act is a California state law that gives property owners the unconditional right to go out of the rental business. In practical terms, it allows you to remove all rental units in a building from the market permanently. It is the only legal mechanism to fully exit the rental market in a rent controlled jurisdiction like Santa Monica.

When the Ellis Act Makes Sense

Owners typically consider the Ellis Act in a few scenarios:

• Converting the building to condominiums (though Santa Monica has additional restrictions on condo conversions)
• Demolishing and redeveloping the property
• Personal use of the entire building
• Exiting the rental business entirely due to regulatory burden, cost, or personal preference

Relocation Payments

Ellis Act relocation payments in Santa Monica are among the highest in California. As of early 2026, base payments are approximately $23,000 to $24,000 per unit. Additional payments apply for elderly, disabled, and family tenants as described in the Just Cause section above. For a 10 unit building with a mix of tenant types, total relocation costs can easily exceed $250,000.

Timeline and Process

The Ellis Act process requires filing a notice of intent to withdraw with the Rent Control Board, followed by individual notices to each tenant. Tenants are entitled to at least 120 days' notice, and elderly or disabled tenants may receive up to one year. During the notice period, tenants continue paying rent and retain all of their rights.

Restrictions on Re Renting

This is the part that catches some owners off guard. If you withdraw units under the Ellis Act and later decide to return them to the rental market, significant restrictions apply. Within the first five years, you must offer the units back to the displaced tenants at their previous rent (adjusted for the allowable annual increases they would have received). Between five and ten years, some restrictions may still apply depending on local ordinances. These restrictions make the Ellis Act a serious commitment. It is not a tool for temporarily removing a difficult tenant.

Consult with your attorney before pursuing an Ellis Act withdrawal. The legal requirements are specific, and mistakes can be costly.

If you own buildings in both Santa Monica and the City of Los Angeles, you are dealing with two completely separate rent control systems. They share some common concepts but differ in important ways.

The biggest practical difference for owners is the annual increase. Santa Monica's increases have been consistently lower than LA's, which means income growth on occupied units is slower. Santa Monica's higher relocation payments also make evictions more expensive. On the other hand, both cities benefit from vacancy decontrol under Costa Hawkins, so the turnover dynamic works the same way.

For a detailed breakdown of the LA system, see our LA Rent Control Guide for Property Owners.

Understanding how state and local laws interact is critical for Santa Monica building owners. Three laws form the framework:

Santa Monica Rent Control Charter Amendment (Local)

This is the local law that governs rent controlled units in Santa Monica. It sets the annual maximum allowable increase, defines just cause eviction requirements, mandates registration, and establishes the Rent Control Board. It applies to buildings with a certificate of occupancy before April 10, 1979.

Costa Hawkins Rental Housing Act (State, 1995)

Costa Hawkins is the state law that limits what cities can do with rent control. Its two key provisions:

• Vacancy decontrol: cities cannot limit what a landlord charges a new tenant after a vacancy. This is what allows Santa Monica landlords to reset rents to market between tenancies.
• Exemptions: cities cannot impose rent control on single family homes, condominiums, or buildings built after February 1, 1995 (or the date of the local rent control ordinance, whichever is later).

AB 1482: California Tenant Protection Act (State, 2019)

AB 1482 is the statewide rent cap and just cause eviction law. It limits annual rent increases to 5% plus local CPI (capped at 10%) and requires just cause for evictions in buildings older than 15 years. However, AB 1482 explicitly exempts units already covered by a local rent control ordinance that is more restrictive.

For Santa Monica owners, this means:

• Pre 1979 buildings: governed by Santa Monica rent control, not AB 1482 (local law is more restrictive)
• Post 1979, pre 2005 buildings: likely covered by AB 1482 (not under local rent control, but old enough to trigger AB 1482's 15 year threshold)
• Buildings built within the last 15 years: exempt from both local rent control and AB 1482

The interaction between these three laws can be confusing. If you are unsure which laws apply to your specific property, consult with a real estate attorney who practices in this area.