California Rent Cap 2026 Emergency Price Gouging Law

If you own rental property in Northern California, consider this your early‑year compliance check. A rule that rarely grabs headlines,  yet carries real consequences, is back in play, and it has everything to do with California’s emergency price‑gouging law.

Emergency declarations are no longer rare events. Fires, floods, storms, droughts — California has seen them all. And every time an emergency is declared at the state or local level, one thing happens automatically: a temporary 10% cap on rent increases and advertised rents goes into effect.

No warning. No countdown. No carve‑outs for good intentions.

Let’s walk through what Northern California landlords need to know right now, where mistakes tend to happen, and how to stay protected in a year where emergency orders are becoming the norm rather than the exception.

The 10% Rent Cap Isn’t New — But It’s Easy to Miss

Under California Penal Code Section 396, whenever a state or local emergency is declared, the state’s anti‑price‑gouging protections activate immediately.

That means:

• Rent cannot be increased more than 10% above the amount charged immediately before the emergency declaration
• The rule applies to existing tenants, renewals, and vacant units
• Advertised rent prices are covered too — not just signed leases

There’s no opt‑in. No special notice. The cap is automatic.

For Northern California landlords, this matters because emergencies don’t need to be statewide to trigger the law. A county‑level or city‑level declaration tied to flooding, wildfire damage, storms, or infrastructure failure can activate the cap just as quickly. If you manage property in areas like the Bay Area, Sacramento region, North Coast, or inland Northern counties, this is especially relevant. These regions see frequent emergency declarations tied to weather events, fire seasons, and flood risks.

Why Northern California Owners Get Caught Off Guard

Most landlords don’t intentionally violate rent laws. The problem is timing and assumptions.

Here’s the pattern we see again and again:

1. A storm, fire, or flood occurs
2. A local or state emergency is declared
3. The rent cap activates quietly
4. Weeks later, a landlord issues a renewal or lists a vacancy — unaware the cap is already in effect

Because emergency declarations often come and go quietly, many owners don’t realize they’re operating under temporary restrictions until after a notice or listing goes out. And unlike rent control ordinances, this rule doesn’t require tenant advocacy, hearings, or new legislation. It’s baked into existing law.

As housing industry leaders have pointed out, these emergency caps can leave landlords stuck and unable to adjust rents to offset rising expenses like:

• Insurance premiums
• Property taxes
• Repair and maintenance costs
• Utility increases

Those costs keep climbing, even when rents are temporarily frozen in place.

How the 10% Cap Is Calculated (This Is Where Mistakes Happen)

The biggest compliance issues don’t come from the 10% number itself — they come from what the 10% is based on.

This law looks backward, not forward.

Here’s how it works:

• If a unit was rented within the 12 months before the emergency, that rent becomes the base amount
• If the unit was advertised but vacant, the last advertised price during that period still counts
• If the unit was subject to local rent control, vacancy does not automatically allow a reset to market rent during the emergency

In other words, vacancy doesn’t equal freedom.

Even listings that never resulted in a signed lease can establish the cap baseline. That surprises many owners and it’s one of the fastest ways accidental violations occur.

A Common Scenario

A unit was listed for $2,100 in October but didn’t rent. In December, a storm hits and an emergency is declared. Listing the unit in January for $2,400 would exceed the allowable cap, even though no tenant ever paid the $2,100. The law still treats that earlier listing as the reference point.

Special Rules for Certain Vacant Units

In limited cases particularly where no rental history exists, California law may cap rent at 160% of HUD Fair Market Rent during an emergency period.

This doesn’t apply to most market‑rate units, but when it does, it adds another layer of complexity. Which is why blanket assumptions about “vacant equals exempt” tend to backfire.

What About Evictions and Tenant Turnover?

Emergency rent caps do not prohibit lawful evictions. If state and local laws allow termination, landlords can still proceed.

However, intent matters. Evicting a tenant for the purpose of re‑renting at a higher price that exceeds the emergency cap is not permitted. And even when an eviction itself is legal, the re‑rental price must still comply with the cap.

This becomes especially relevant during turnover:

• Removing a tenant doesn’t reset the cap
• Renovations don’t automatically justify increases beyond 10%
• “New lease, new price” logic doesn’t apply during emergencies

Improper pricing after a lawful eviction can still trigger enforcement issues and those issues tend to linger long after the emergency ends.

Penalties Aren’t Theoretical

Violating California’s anti‑price‑gouging law isn’t a slap‑on‑the‑wrist situation.

Potential consequences include:

• Criminal misdemeanor charges
• Fines up to $10,000 per violation
• Civil penalties and restitution
• Unlawful business practice claims

Even unintentional violations can create serious exposure, especially if a tenant files a complaint or an advertisement draws scrutiny.

How Northern California Landlords Can Stay Protected

With emergency declarations becoming more frequent, the safest strategy right now is a conservative one.

Smart steps to take:

• Assume the cap applies whenever an emergency is active in your city, county, or statewide
• Review rent history before issuing renewals or increases
• Double‑check all listings — pricing errors count even without tenants
• Be cautious with vacancy pricing and turnover assumptions
• When unsure, pause and verify before acting

Emergency orders eventually expire. Improper rent increases have a much longer shelf life.

Wrap Up

For Northern California landlords, emergency rent caps are no longer rare interruptions-they’re part of the operating environment. Understanding how California’s price‑gouging law works, how rent baselines are calculated, and how vacancies are treated can make the difference between staying compliant and facing unnecessary risk. The rules may feel frustrating. But informed owners stay protected and profitable even when the landscape shifts.

If you own or manage rental property and want help navigating emergency regulations, rent strategy, and compliance across California, our team is here to help guide you through every step.