Rent Control Expansion in 2026: Where It Spread and How Owners Are Responding

2026 is the first full year in which three states cap rent increases statewide, and the year New York City froze stabilised rents on both one- and two-year renewals for the first time. The caps in force: Oregon 9.5%, Washington 9.683% rising to 10% in 2027, California 5% plus inflation with a 10% ceiling. A bill to cut California’s cap to 2% plus inflation died in January 2026. Owners’ responses fall into three groups: sell and exchange into an unregulated market, exchange into a trust interest, or restructure to fit an exemption. This post gives the rules from the agencies that publish them, then the paths.

Washington: the newest statewide cap

House Bill 1217, signed in May 2025, limits annual increases after the first year of a tenancy to 7% plus the consumer price index or 10%, whichever is less, and bars any increase “during the first 12 months after the tenancy begins.” The Department of Commerce publishes the figure each July from June CPI data. It announced 9.683% for calendar 2026 on July 18, 2025, and its landlord resource center now lists 10% for calendar 2027. Exemptions are set out in RCW 59.18.710. The state page on exchanging in Washington covers the tax side.

Oregon: 9.5% for 2026

Under ORS 90.323 and 90.324 the maximum annual increase is the lesser of 10% or 7% plus CPI. The Department of Administrative Services published the 2026 figure on September 30, 2025: 9.5% for residential tenancies, and 6% for manufactured dwelling parks and marinas with more than 30 spaces under ORS 90.600. The 2027 figure is due at the end of September 2026. See exchanging in Oregon.

California: the cap held, the cut failed

Civil Code section 1947.12 caps increases at “5 percent plus the percentage change in the cost of living, or 10 percent, whichever is lower,” measured by the regional CPI from April to April, in no more than two increments per 12 months. Exempt housing includes units issued a certificate of occupancy within the previous 15 years, owner-occupied duplexes, and single-family homes not owned by a corporation or REIT where the required notice is given. The section repeals itself on January 1, 2030.

AB 1157, which would have lowered the cap to 2% plus inflation with a 5% ceiling, extended coverage to single-family homes and condominiums, and removed the 2030 sunset, died on January 31, 2026 under the constitutional deadline for two-year bills. Expect it back in a new number; the California exchange page stays current on the tax rules that make an exit expensive without an exchange.

New York City: 0% and 0%

The Rent Guidelines Board’s adopted guidelines for 2026-27, voted June 25, 2026, set renewal increases at 0% for one-year leases and 0% for two-year leases beginning between October 1, 2026 and September 30, 2027, with 0% for stabilised lofts and hotel classes as well. For an owner of a stabilised building whose insurance, taxes and payroll are not frozen, the order sets the operating margin for the next year. The New York exchange page covers the state’s claw-back and withholding rules.

Minnesota: Saint Paul’s 3%

Saint Paul’s ordinance, approved by voters in November 2021, limits increases to 3% in any 12-month period. Council amendments effective January 1, 2023 added a 20-year exemption for newly constructed rentals, and further amendments took effect June 13, 2025. Owners can apply for exceptions: self-certification between 3% and 8%, a just-cause vacancy allowance of CPI plus 8%, or a staff determination above that with justification. Reports of a 2026 vote to make the new-construction exemption permanent were not on the city’s page when we checked, so we do not state it here.

What a cap does to the sale

A cap does not stop a sale; it changes who bids and at what price. A hypothetical 20-unit building with $500,000 of net operating income whose rents can grow 3% a year while costs grow 5% loses margin every year, and a buyer prices that trajectory into the cap rate. The owner who sells at a 5.5% cap into an unregulated market at 6.5% keeps the same equity working at a higher yield and a growth rate set by the market rather than an ordinance. Run your own numbers with your CPA, including the state tax and claw-back rules on the exit.

How owners are responding

• Exchange to an unregulated state. The planned guides on exiting a rent-regulated building and exchanging into a landlord-friendly state cover valuation, buyer pool and the replacement-state questions, and the state hub lists every state’s rules.
• Exchange into a trust interest. A traditional DST holds institutional property, including multifamily, with management in place and no landlord obligations on you. The interest is illiquid, sponsor-controlled and dependent on the trust’s tenants, which is the trade for leaving the ordinance behind.
• Stay and fit an exemption. Buildings under the 15-year line in California, under Saint Paul’s new-construction exemption, or outside RCW 59.18.710 in Washington are a different asset from the regulated stock next door, and some owners rebalance toward them.

What to do now

1. Write down your building’s allowable increase for 2026 and 2027 from the agency figures above, and compare it with your cost growth.
2. Price the exit with the state’s tax rules, not just the federal ones; the state pages linked above carry withholding and claw-back.
3. Decide between a replacement building and a trust interest before listing, so the identification list is ready on day one.
4. Request a proposal with the rent roll and the loan; the replacement that fits follows from those two documents.

Sources

• Washington State Department of Commerce, HB 1217 Landlord Resource Center
• Oregon Department of Administrative Services, 2026 Rent Stabilization Percentages
• California Civil Code section 1947.12
• California Legislature, AB 1157 (2025-2026) bill status
• New York City Rent Guidelines Board, Adopted Summary of Guidelines (2026-27)
• City of Saint Paul, Rent Stabilization