Sacramento's two rent caps, and what they do to your sale price
A Sacramento rental can sit under one of two rent caps: the city's own ordinance or the state's Tenant Protection Act. On paper they use the same formula, 5% plus inflation with a 10% ceiling. But they cover different buildings and reset on different dates, and a buyer's agent will check the fine print line by line.
If you are about to sell, the cap matters for a plain reason. It decides how fast the next owner can move your tenant's rent toward market, and that speed is baked into what they will pay you.
The formula, and where Sacramento's inflation number comes from
The state rule is Civil Code section 1947.12. Over any 12 months an owner can't raise the rent more than 5% plus the percentage change in the cost of living, or 10%, whichever is lower, measured against the lowest rent charged in the prior 12 months.
The statute names four metro price indexes, for Los Angeles, Riverside, San Diego and San Francisco. Sacramento isn't one of them, so the law falls back to the California consumer price index that the state Department of Industrial Relations publishes. The comparison is April to April. For increases that take effect on or after August 1 you use the newest April. Before August 1 you use the year before.
The city chapter, Sacramento City Code 5.156, uses the same pieces: 5% plus the change in the California index, not to exceed 10%. The city sets the number once a year and it takes effect July 1. You can read the full chapter on the city's site.
The city's published limits since 2019
The city has posted its maximum every year since the ordinance started in September 2019.
Each July figure runs through the following June 30. The first two periods were set before the July cycle began.
| Period starting | Max increase |
|---|---|
| Sep 2019 | 8.5% |
| Jan 2020 | 8.3% |
| Jul 2020 | 6.0% |
| Jul 2021 | 9.0% |
| Jul 2022 | 10.0% |
| Jul 2023 | 9.2% |
| Jul 2024 | 8.8% |
| Jul 2025 | 7.7% |
| Jul 2026 | 8.6% |
Source: City of Sacramento Tenant Protection Program. Dashed line: the 10% ceiling in both laws.
I didn't want to take the percentages on faith, so I ran them myself from the April index values in the Department of Industrial Relations CPI table. Every year matches the city's figure.
| Starts July 1 | Prior April index | This April index | Change, rounded | 5% plus change | Cap that applies |
|---|---|---|---|---|---|
| 2020 | 280.275 | 283.006 | 1.0% | 6.0% | 6.0% |
| 2021 | 283.006 | 294.274 | 4.0% | 9.0% | 9.0% |
| 2022 | 294.274 | 316.847 | 7.7% | 12.7% | 10.0% |
| 2023 | 316.847 | 330.049 | 4.2% | 9.2% | 9.2% |
| 2024 | 330.049 | 342.734 | 3.8% | 8.8% | 8.8% |
| 2025 | 342.734 | 352.063 | 2.7% | 7.7% | 7.7% |
| 2026 | 352.063 | 364.746 | 3.6% | 8.6% | 8.6% |
Same math under the state law, with one wrinkle. The state number changes August 1, the city's July 1. So for a state-covered house, an increase taking effect in July 2026 was still capped at 7.7%, and from August 1, 2026 the cap is 8.6%. The Sacramento Housing and Redevelopment Agency posts the same 8.6% figure on its page for voucher landlords, along with a note that AB 1482 applies to voucher tenants too.
Which buildings answer to which law
Here is where owners get tripped up. The city chapter covers fewer buildings than people think.
| Rule | City chapter 5.156 | State Civil Code 1947.12 |
|---|---|---|
| Typical coverage | Duplexes and apartments in city limits built on or before Feb 1, 1995 | Most other residential rentals in California |
| Exempt | Single dwelling units, condos, co-ops, owner-occupied units, units built after Feb 1, 1995 | Housing with a certificate of occupancy in the last 15 years; qualifying houses and condos with the exemption notice; owner-occupied duplex |
| Formula | 5% plus California CPI, max 10% | 5% plus California CPI for Sacramento, max 10% |
| How often | Once in 12 months | Up to two increases in 12 months, same total cap |
| New figure starts | July 1 | August 1 |
| After a vacancy | Owner sets new base rent | Owner sets new starting rent |
| Registration | Annual registry, $20 per unit program fee | None |
| Enforcement | City penalties up to $25,000 | Tenant lawsuit, up to three times the overcharge if willful |
| Ends | December 31, 2029 | January 1, 2030 |
Two practical notes. Most rentals in the city also owe the separate rental inspection program fee, $25 per unit as of July 2025, whichever cap applies. And the city's administrative procedures say an owner is under one law or the other, not both. If your building is under the city chapter I would still behave as if both apply: one increase a year, never above the lower number in force that month. It costs you very little, and nobody can argue with it. If you are unsure which side you're on, the city's Tenant Protection Program office will tell you.
The single-family exemption, and the notice that makes it work
A house or condo with its own title can be exempt from the state cap, but only if two things are both true.
- The owner is not a real estate investment trust, not a corporation, and not an LLC with at least one corporate member.
- The tenant got written notice using the exact statement in the statute, which begins "This property is not subject to the rent limits imposed by Section 1947.12."
For any tenancy that started or renewed on or after July 1, 2020, that notice has to be in the rental agreement itself. A friendly email doesn't count. If the clause is missing, the house is under the cap and under the just-cause rules, whatever the owner believed.
That matters at sale in two ways. A buyer reading your leases will look for the clause, and if it isn't there they will price the house as capped. The exemption also depends on who owns the place. If the buyer is a corporation or an LLC with a corporate member, it ends the day your ownership does.
Why a buyer cares about all this
An investor values a rental on the rent it brings in now and the rent it can bring in soon. A cap stretches out "soon." When I sold my Oak Park duplex, every investor who called asked the same two things before anything about the roof: what each side paid, and when it last went up. The statute also defines "owner" to include a predecessor in interest, so the buyer inherits your increase history. If you raised the rent four months before closing, the new owner waits out the rest of that 12-month window.
Here is a worked example with made-up but ordinary numbers.
| Example: duplex, two units | Per unit |
|---|---|
| Current rent (assumed) | $1,650 |
| Market rent for the same unit (assumed) | $2,000 |
| Most it can rise in the next 12 months at 8.6% | $1,791.90 |
| Gap still left after that increase, per month | $208.10 |
| Same gap over a year | $2,497.20 |
Across both units that is $4,994.40 a year the buyer can't collect, and nobody knows next year's cap until the April 2027 index comes out. A buyer will discount for it, and you would too in their seat. One more timing detail: Civil Code 827 requires 30 days' written notice for an increase of 10% or less, so even a lawful increase can't land the day escrow closes.
The flip side is the vacancy rule. Under both laws the owner sets a fresh rent when a unit turns over, which is why an empty unit and an occupied one can draw very different offers.
Before you list
- Pull every rent increase notice since July 2019 and check each one against the cap in force on its effective date.
- Find the exemption clause in your house or condo leases, or confirm it isn't there.
- Make sure the building is registered with the city if it is covered, and that the fees are paid.
- Write down each tenant's move-in date. It drives both the cap history and the just-cause clock.
If the rent sits well under market and you'd rather not argue that gap with a string of investors, a direct sale is one option to price out. The Lorris Home Buyers team in Sacramento has written a plain guide to fast sales in Sacramento and lists what kinds of houses they buy. Whatever route you take, have the rent history in hand first. A buyer who finds a 9% increase from June 2025, when the cap was 8.8%, will lower the offer to cover what the tenant could recover, and they will be right to.