Thanks to its notoriety as the Queen City of Silicon Valley, San Jose is both the most populous city in the San Francisco Bay Area and one of the most expensive places in the nation to be a renter. These factors have fueled a surge in concern for tenant’s rights there. Following a number of high profile mass evictions in recent years, among the issues facing landlords in San Jose is a groundswell of new neighborhood associations and tenant collectives organized around addressing code enforcement and quality of life concerns.
While San Jose does have rent control ordinances on the books, unlike many places with such regulations, the city doesn’t have a “just-cause” directive in place. This means San Jose landlords can circumvent rent control by evicting tenants protected by the ordinance and bring in new renters at current market prices. While the practice is frowned upon, there is nothing of substance in place to prevent it. Activists are pressing the San Jose City Council to close this loophole.
This comes in addition to previous effort by legislators to protect tenant’s rights in the city. In April of 2016, the City Council voted to establish a five percent cap on annual rent increases, lowering it from eight percent. Some 43,000 units of housing, the equivalent of approximately one third of the available rental housing supply in San Jose was affected by the change.
Many people on both sides of the issue criticized this decision. The consensus was that a far better solution would have been supporting the construction of more affordable housing in the city. It was asserted this would relieve some of the pressure on the market and increase competition among property owners, which would also be likely to result in lowered rents. Landlords also see this as a good thing when compared to rent control, as they feel they would then be freed to establish rents at fair market value.
Another issue facing landlords in San Jose is accusations of retaliatory evictions. These are defined as evictions predicated by a tenant’s complaints, participation in a tenant’s union, or any other similar activities with which a landlord finds concern. The law bars landlords from enforcing normal eviction remedies in these situations. However, in one case, a San Jose tenant alleges he was served with a 90-day notice to vacate after meeting with the mayor regarding housing conditions.
Under such terse circumstances, landlords considering property management in San Jose can really benefit from professional management services. With so many issues currently in play, area-specific companies like Onerent that are intimately familiar with the market and its politics can be of considerable benefit to real estate investors.
In addition to the above, San Jose also requires landlords to have a residential occupancy permit (ROP) on file with the city. This obligation pertains to apartments, hotels, motels, fraternities, sororities, emergency shelters and residential care facilities. Residential occupancy permits must be renewed annually, but condominiums and single-family residences are exempt. The invoice is mailed in mid-November of each year; payment is due by December 31st.
Another issue imposed by San Jose with which landlords should be familiar is the requirement for approval from the city’s planning department before making changes to the exterior of multifamily dwellings. Owners and managers are also encouraged to ensure building, plumbing, mechanical and electrical permits are obtained and finalized before any work begins in these areas.
While there is a great deal of profit potential in the San Jose rental market, property owners must pay careful attention to city’s political issues and regulatory environment to avoid jeopardizing their investments.