California Extends Emergency Rent Caps to Long-Term Leases

California renters with long-term leases will soon get the same protection against emergency rent spikes that renters on shorter leases already have. Gov. Gavin Newsom signed Senate Bill 1365 on September 30, according to the California Apartment Association, which opposed the measure.

What the law changes

California's price-gouging statute, Penal Code Section 396, generally bars businesses, including landlords, from raising prices by more than 10% after the governor or a local government declares a state of emergency, such as for a wildfire or earthquake. Violations are misdemeanors.

Until now, tenants who signed an initial lease of more than 12 months fell outside the cap. SB 1365, authored by Sen. Ben Allen, D-Santa Monica, removes that exclusion, so the 10% emergency cap will apply regardless of lease length. The change takes effect January 1, 2027.

The bill also gives landlords new defenses. According to the apartment association, a rent increase above 10% may be defended if the tenant agreed to it before the emergency was declared, or if it is directly tied to the cost of repairs or additions that meet specific conditions. An earlier analysis by the association noted that rent increases written into a long-term lease signed before an emergency can still take effect.

How the bill evolved

As introduced, SB 1365 would also have given city attorneys in California's largest cities, those with more than 900,000 residents, new power to bring antitrust claims under the state's Cartwright Act, according to earlier CAA coverage. Lawmakers removed the antitrust provisions in August, leaving the rental housing changes in place. The Senate gave final approval on a 27-10 vote on August 31, according to the association.

The emergency-rent bills moved through the Legislature in the wake of recent fires in Los Angeles. Opponents, including the California Apartment Association, argued it stretches the price-gouging law beyond its purpose and creates compliance risks for owners, including the possibility of misdemeanor charges carrying up to a year in jail and fines of up to $10,000.

Another emergency bill

SB 1365 was one of two bills this session aimed at the emergency cap. A second measure, SB 493 by Sen. Josh Becker, D-Menlo Park, sought to add war, including active U.S. military operations, to the list of events that can trigger the price-gouging limits, according to the apartment association, which also opposed that bill. Renters should check official sources for its final status. Taken together, the proposals reflect a push by lawmakers to make emergency protections cover more households and more types of crises.

What it means for renters

• Know when the cap applies. The 10% limit applies only in areas covered by a declared emergency and generally for the period the declaration and any extensions remain in force. Check the governor's office or your city or county for current declarations.
• Long-term leases count starting in 2027. If you sign a lease longer than one year, you will now be covered by the emergency cap the same way month-to-month and one-year tenants are, after the law takes effect.
• Read your lease for built-in increases. Scheduled increases you agreed to before an emergency may still be allowed. Know what your lease already says.
• Document any large increase. If you receive a rent increase of more than 10% during a declared emergency, save the notice and your lease. You can report suspected price gouging to the California Attorney General or your local district attorney.
• Other protections still apply. Many California renters are also covered by the statewide rent cap under the Tenant Protection Act or by local rent control, which limit increases in normal times.

For renters in fire-prone and disaster-prone parts of the state, the change closes a gap that left some households on longer leases without emergency rent protection.