Rent increase limits,
and the exemption owners lose by accident.
Most single family rentals on the Peninsula are exempt from California's rent cap. A surprising number of owners have lost that exemption without knowing it, because the exemption depends on a piece of paper rather than on the property.
The cap
Where the Tenant Protection Act applies, the annual increase is limited to five percent plus the regional consumer price index, or ten percent, whichever is lower. Monterey County has no metropolitan CPI of its own, so it uses the California statewide figure, the bucket covering all other California counties.
For 1 August 2026 through 31 July 2027 the reported maximum is 8.6 percent. The figure rolls over every 1 August, which means an increase calculated correctly in July can be wrong in August. Confirm the current number before serving any notice.
The exemptions
Single family homes and condominiums
Exempt from both the rent cap and the just cause requirements, but only if both of the following hold:
- The owner is not a real estate investment trust, a corporation, or an LLC with a corporate member; and
- The required written exemption notice has been given to the tenant.
The notice is the whole ballgame. No notice, no exemption. It is a routine document that takes two minutes to serve correctly and costs thousands to have missed, and it is precisely the sort of thing that gets forgotten by an owner who is self managing a house they used to live in.
The entity test catches people too. Many owners hold title through an LLC on their accountant's advice without realizing it interacts with the exemption. Whether a particular LLC has a corporate member is a question worth answering before the next increase, not after.
New construction
Housing with a certificate of occupancy issued within the last fifteen years is exempt. Note that this is a rolling window, so units age into coverage. A Marina or Seaside property built in 2012 is exempt today and will not be in a few years.
Other exemptions
Owner occupied duplexes, certain deed restricted affordable housing, and some dormitory housing.
Just cause
Where the act applies, just cause requirements attach after twelve months of tenancy, or twenty four months where an additional adult tenant has been added. No fault terminations require relocation assistance equal to one month's rent. SB 567, effective April 2024, tightened the owner move in and substantial remodel grounds and added enforcement teeth, so the older understanding of what qualifies as a substantial remodel is no longer reliable.
Local rules on the Peninsula
None of the Peninsula cities has general rent stabilization or a local just cause ordinance. The state act is the operative regime in Monterey, Carmel-by-the-Sea, Pacific Grove, Seaside and Del Rey Oaks.
Marina has two narrow programs. Preston Park and Abrams Park, 548 city owned former military housing units, sit under a 2010 policy capping annual increases at three percent or CPI, whichever is lower, and that policy has been under council review. Marina also has a mobile home rent stabilization ordinance at municipal code chapter 5.72. Neither reaches ordinary private rentals in the city.
Watch Salinas. In September 2024 Salinas became the first Monterey County city to adopt rent stabilization, capping increases at 2.75 percent on multifamily built before 1 February 1995, alongside just cause, tenant anti harassment and a rental registry. The council voted to repeal all four in 2025, tenants qualified a referendum, and the question goes to voters in November 2026. The four ordinances remain in effect until then. Whatever happens there sets the political precedent for the rest of the county.
The 2030 sunset, and the bill that nearly ended the exemption
The Tenant Protection Act currently sunsets on 1 January 2030. AB 1157, introduced in 2025, would have reduced the cap to five percent or CPI whichever is lower, removed the single family and condominium exemption entirely, and deleted the sunset. It stalled in committee. It will be back in some form, and any long term hold analysis on a Peninsula single family rental should treat the exemption as valuable but not permanent.
Questions
What is the maximum rent increase in Monterey County right now?
Where the Tenant Protection Act applies, the cap is five percent plus the regional consumer price index, or ten percent, whichever is lower. Monterey County has no metropolitan CPI of its own and uses the California statewide figure. For the period 1 August 2026 through 31 July 2027 the reported maximum is 8.6 percent. The figure changes every 1 August, so confirm before serving a notice.
Is my single family home exempt?
Only if two things are both true. The owner must not be a real estate investment trust, a corporation, or an LLC with a corporate member. And the required written exemption notice must have been given to the tenant. Without that notice the exemption does not apply, regardless of the property type.
What happens if I forgot the exemption notice?
The property is treated as covered, which means the rent cap and the just cause requirements apply. The notice can generally be given going forward, but it does not retroactively cure an increase that already exceeded the cap. This is the single most common and most expensive compliance error we see on the Peninsula.
Is there local rent control on the Monterey Peninsula?
No city on the Peninsula has general rent stabilization. Monterey, Carmel-by-the-Sea, Pacific Grove, Seaside and Del Rey Oaks have neither rent control nor a local just cause ordinance. Marina has two narrow programs: a cap on its city owned Preston Park and Abrams Park units, and a mobile home rent stabilization ordinance. Neither applies to ordinary private rentals.
When does the state law expire?
The Tenant Protection Act currently sunsets on 1 January 2030. A 2025 bill, AB 1157, would have cut the cap, removed the single family exemption entirely and deleted the sunset. It did not advance, but the single family exemption should be treated as politically exposed rather than permanent.
Reviewed August 2026. This is general information for owners and not legal advice. Rent cap figures change annually on 1 August and specific circumstances vary. Confirm before serving a notice.
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