Pricing, Deposits, and Lease Terms: Staying Compliant in Berkeley's Changing Rental Market

Many housing providers find themselves adjusting terms when the market shifts, such as moving from furnished to unfurnished, short-term to long-term, or testing out different price points. But Berkeley’s Rent Stabilization Ordinance (RSO), combined with recent changes in state law, sets clear limits on what you can and cannot do. Missteps can expose you to fair housing claims, unlawful deposit amounts, or confusion over lease terms.

This article explains how to stay compliant when setting your rent, deposit, and lease terms.

1. Applications: Anyone Can Apply

Once a rental is listed, anyone who sees it is legally entitled to apply.
Landlords cannot block or “uninvite” someone from applying.
The protection comes from your written screening criteria. Apply those criteria consistently, and that is how you determine whether someone qualifies.
Always use objective denial reasons, never subjective language like “not a good fit” or “things don’t align.”

2. Security Deposit Limits: 2024 Law Change

There is no longer a distinction between furnished and unfurnished rentals.
Maximum deposits are now capped at:

• One month’s rent for most landlords

• Two months’ rent for “small landlords” who own no more than two rental properties in the state, totaling four or fewer rental units

Example: If rent is $8,000, the legal deposit is $8,000 (or $16,000 if you qualify as a small landlord).
An $18,000 deposit is not legal under the new law.

3. Pricing and Reposting Your Listing

You may remove and repost a listing at a new rent or with new terms, but only before you begin processing applicants under the old price.
Once you have qualified applicants based on $5,000/month, you cannot change the rent to $8,000/month for those same applicants. You would need to close out the old listing and start fresh.

Pro Tip: Zillow and other platforms track price changes publicly. Frequent or extreme rent adjustments can raise red flags for prospective renters. For credibility and compliance, set your terms clearly before posting, and make minor adjustments, not massive changes. 

4. Pricing and Negotiation

It is not permissible to change the rent while applications are already pending. Applicants must be screened based on the advertised price.
Once you have processed and denied all applicants, you may withdraw the listing and repost at a different rent for future applicants.
During lease negotiations with a qualified applicant, you may discuss mutually agreeable terms before signing. For example, you could adjust the rent if the tenant requests a shorter or longer lease term, or if additional services such as parking are included.
The key is to apply this consistently. If you adjust rent for one applicant but not others without a neutral reason, it could appear discriminatory.

5. Lease Terms and Eviction Protections

In Berkeley, nearly all tenants are covered by just-cause eviction protections.
This means:

• A two-year lease does not guarantee the tenant will leave after two years

• Even if a tenant says they plan to stay short-term, they may change their mind and remain

• The law, not the lease term, controls when you can recover possession

The sabbatical or owner’s right to return exemption is only available if 1) it's the owner's principal residence and they are leaving temporarily, 2) the owner resided in the property for the 365 days immediately preceding the lease, and 3) they own no other property in the city of Berkeley. 

Bottom Line for Housing Providers

Set your terms clearly before advertising. Decide whether you want the unit furnished or unfurnished, what rent amount you are comfortable with, and the lease term you are prepared to honor.

• Keep deposits within the legal caps.
• Advertise consistently and avoid editing prices midstream.
• Apply your screening criteria consistently rather than relying on subjective judgments.
• Understand eviction protections. Once a tenant moves in, the lease term alone does not give you the right to reclaim possession.

By staying consistent and compliant up front, you protect yourself from legal pitfalls and save time by only processing applications that truly fit your offering.