The new Orange County rent cap is here. But before you raise the rent on your Newport Beach or Costa Mesa rental, there is a more important question to ask: Should you?

Quick Answer: The maximum rent increase under California’s Tenant Protection Act for covered rental properties in Orange County is 8.7% for increases effective August 1, 2026 through July 31, 2027. This applies to covered properties in Newport Beach, Costa Mesa and throughout Orange County. Some properties are exempt, including certain qualifying single-family homes and condominiums.

It’s that time of year again.

Rental property owners are looking at rising expenses, reviewing the market, and tackling the familiar question: What should the new rent be?

For many Orange County landlords, we now have an important number.

Effective August 1, 2026 through July 31, 2027, the maximum annual rent increase under California’s Tenant Protection Act is 8.7% for covered rental properties in Orange County.

But that 8.7% figure is only the beginning.

Whether your property is actually subject to the rent cap, how much you can legally increase the rent, and whether raising the rent to the maximum makes financial sense can be very different questions.

And in high-value rental markets like Newport Beach, Costa Mesa, Corona del Mar, Newport Coast and the surrounding coastal Orange County communities, those distinctions can matter—a lot.

Why Is the Orange County Rent Cap 8.7%?

California’s Tenant Protection Act, often called AB 1482, generally limits annual rent increases for covered properties to:

5% + the applicable change in the Consumer Price Index (CPI), or 10%, whichever is lower.

For rent increases taking effect on or after August 1, California Civil Code Section 1947.12 uses the applicable CPI change from April of the current year compared with April of the prior year.

The applicable CPI for Orange County is the Los Angeles–Long Beach–Anaheim Consumer Price Index for All Urban Consumers (CPI-U).

According to the U.S. Bureau of Labor Statistics, that index increased 3.7% for the 12 months ending April 2026. The Los Angeles–Long Beach–Anaheim statistical area includes both Los Angeles and Orange Counties.

So, for the new period:

5% + 3.7% CPI = 8.7%

That makes 8.7% the maximum annual increase under the statewide Tenant Protection Act for covered Orange County properties for rent increases taking effect from August 1, 2026 through July 31, 2027.

But Can Every Newport Beach or Costa Mesa Landlord Raise Rent 8.7%?

No.

This is where California rental law gets more complicated.

The 8.7% figure is a maximum for properties covered by the TPA. It is not an automatic rent increase available in every situation.

California Civil Code Section 1947.12 calculates the cap based upon the lowest gross rental rate charged for the unit during the 12 months before the effective date of the increase. For a continuing tenant, the law also generally prohibits increasing the rent in more than two increments during a 12-month period.

So before sending that rent increase notice, it is important to look at the property’s actual rental history.

And there is another big question.

Your Property May Be Exempt From the California Rent Cap

This is particularly important in Newport Beach and Costa Mesa, where a significant portion of the rental housing stock consists of individually owned single-family homes, condominiums, duplexes and other smaller residential properties.

Certain residential properties are exempt from the statewide rent cap.

For example, qualifying residential property that can be separately sold—including many individually owned single-family homes and condominiums—may be exempt when the ownership structure meets the statutory requirements.

Among other requirements, the owner generally cannot be a REIT, corporation, or an LLC with a corporate member. Critically, the tenant must also have been provided the specific statutory notice that the property is exempt.

That last part is easy to overlook.

Simply owning a single-family home does not necessarily mean you should assume your tenancy is exempt.

The ownership, property type, tenancy dates, lease language and required notices all matter.

We have seen SO MANY landlords that are “exempt” but they (or their agents or property managers) failed to provide the required Exemption Notice.

Other exemptions can also apply, including certain newer housing that received its certificate of occupancy within the previous 15 years and certain owner-occupied two-unit properties.

The Bigger Question: Should You Actually Raise the Rent 8.7%?

This is where legal advice and good real estate advice can head in different directions.

The law tells you what you may be allowed to do. The market helps tell you what you should do.

Imagine a Newport Beach rental currently leasing for $7,500 per month.

An 8.7% increase would take the monthly rent to approximately $8,153.

But what if comparable homes are leasing for $7,800?

Or what if you have an exceptional tenant who pays on time, takes great care of the property and plans to stay for several more years?

Pushing rent to the statutory maximum simply because you can may not be the best investment decision.

Turnover has a cost.

Vacancy has a cost.

Painting, repairs, cleaning, leasing commissions and preparing a property for a new tenant have a cost.

A strong tenant has value, too.

On the other hand, we regularly see the opposite problem: owners who have left rents untouched for years and suddenly discover that their rental income is significantly below market.

For owners of valuable Newport Beach and Costa Mesa investment properties, the difference can add up quickly.

That is why we prefer to start with the market.

What would the property rent for today? What is the current tenant paying? What restrictions apply? What is the tenant relationship worth? And what is the owner’s long-term plan for the property?

Those questions usually lead to a better decision than simply asking, “How much can I raise the rent?”

Thinking About Selling Instead? The Tenant and Rent Can Matter

The rent discussion can become even more important when an owner is considering a sale.

If you own a rental home in Newport Beach, Costa Mesa, Corona del Mar, Newport Coast or another Orange County coastal community, the existing tenancy can affect how the property is positioned for sale.

Is the likely buyer another investor?

Would the property be more valuable to an owner-occupant?

Is the existing rent above or below market?

What does the lease say?

Is the property subject to the Tenant Protection Act’s just-cause provisions?

What options exist if an owner ultimately wants to sell the property vacant?

These are not questions that should first come up after the property hits the MLS.

They should be part of the pre-sale strategy.

At Lucas Real Estate Group, this is one of the areas where our background is particularly useful. We approach the property not only from the perspective of a Newport Beach real estate broker and REALTOR®, but also with an understanding of California real estate law and the tax issues that often accompany investment property decisions.

The goal isn’t simply to put a sign in the yard.

It is to understand the asset, the tenancy, the owner’s objectives and the available paths before deciding how to sell.

Frequently Asked Questions: Orange County Rent Increases for 2026–2027

What is the maximum rent increase in Orange County in 2026?

For rental properties covered by California’s Tenant Protection Act (AB 1482), the maximum annual rent increase in Orange County is 8.7% for increases taking effect from August 1, 2026 through July 31, 2027.

The limit is calculated as 5% plus the applicable Consumer Price Index (CPI). The applicable Los Angeles–Long Beach–Anaheim CPI-U increased 3.7% for the 12 months ending April 2026, resulting in an 8.7% maximum increase for covered properties.

What is the 2026 rent increase limit in Newport Beach?

For Newport Beach rental properties covered by California’s Tenant Protection Act, the maximum annual rent increase is 8.7% from August 1, 2026 through July 31, 2027.

However, not every Newport Beach rental is subject to the statewide rent cap. Certain single-family homes, condominiums, newer properties and other qualifying properties may be exempt. The specific property, ownership structure, lease and required exemption notices should be reviewed before assuming an exemption applies.

What is the 2026 rent increase limit in Costa Mesa?

For Costa Mesa rental properties subject to the California Tenant Protection Act, the maximum annual rent increase is also 8.7% for increases taking effect August 1, 2026 through July 31, 2027.

Costa Mesa and Newport Beach use the same applicable regional CPI for purposes of calculating the statewide TPA rent cap.

Does AB 1482 apply to single-family homes in Newport Beach or Costa Mesa?

Sometimes. Certain individually owned single-family homes can be exempt from the Tenant Protection Act’s rent cap if the property and ownership meet the statutory requirements and the tenant has received the required exemption notice.

Owners should not assume that a property is exempt simply because it is a single-family home. The ownership structure and required lease or notice language matter.

Are condominiums exempt from California rent control?

Certain individually owned condominiums may qualify for an exemption from the Tenant Protection Act’s rent cap, subject to statutory ownership and notice requirements.

This can be particularly important in Newport Beach and Costa Mesa, where individually owned condos make up a significant portion of the rental market.

Can a landlord automatically raise the rent by 8.7%?

No. 8.7% is the maximum increase permitted by the statewide Tenant Protection Act for a covered Orange County property during this period—not an automatic increase that applies to every tenancy.

The property’s rental history, applicable exemptions, lease terms, required notices and any other applicable restrictions should be considered before a rent increase is issued.

There is also a business question: the maximum legal increase may not be the best market decision. Owners should compare the existing rent with current rental value before deciding how much to increase the rent.

How is the California rent cap calculated?

For covered properties, California’s Tenant Protection Act generally limits annual rent increases to 5% plus the applicable change in the Consumer Price Index, or 10%, whichever is lower.

For the August 1, 2026 through July 31, 2027 period, the applicable CPI change for Orange County is 3.7%. Adding 5% produces the 8.7% Orange County rent increase limit for covered properties.

Should I raise my Newport Beach or Costa Mesa tenant’s rent to the maximum?

Not necessarily.

The legal maximum and the right business decision are two different things. Before raising rent, consider the property’s current market rental value, how far the existing rent is below market, the quality of the tenant, potential vacancy and turnover costs, and your long-term plans for the property.

For some owners, retaining an excellent tenant at slightly below market rent can make financial sense. For others, a rent adjustment may be long overdue.

How much is my Newport Beach or Costa Mesa rental property worth?

Rental value can vary substantially based on neighborhood, property type, condition, upgrades, parking, outdoor space, views, proximity to the beach and current inventory.

Lucas Real Estate Group provides rental market analyses and property management services for Newport Beach, Costa Mesa and surrounding Orange County communities. We can compare your property with current and recently leased properties to help determine a realistic market rental range.

Should I rent or sell my Newport Beach or Costa Mesa property?

That depends on more than today’s rent.

Owners should consider the property’s current sale value, potential rental income, operating expenses, appreciation potential, financing, capital gains exposure, possible 1031 exchange opportunities, property-tax considerations and their broader investment goals.

For owners considering both options, Lucas Real Estate Group can evaluate the property from both sides: What could it sell for, and what could it rent for? That comparison can provide a much better starting point for deciding whether to sell, hold or lease.

Can Lucas Real Estate Group manage my Newport Beach or Costa Mesa rental?

Yes. Lucas Real Estate Group provides full-service property management in Newport Beach, Costa Mesa and surrounding Orange County coastal communities, including marketing and leasing, tenant screening, rent collection, maintenance coordination and ongoing property oversight.

Our team also brings real estate brokerage, legal and tax knowledge to the broader issues that can arise during property ownership.

Who can help me understand AB 1482 and the California Tenant Protection Act?

California landlord-tenant rules can depend heavily on the property, ownership structure, lease, notices and history of the tenancy.

Devin R. Lucas is a California Real Estate Attorney, Real Estate Broker and REALTOR® serving Newport Beach, Costa Mesa and surrounding Orange County communities. Lucas Real Estate Group also provides residential sales and property management services for local property owners.

For individualized legal advice regarding the Tenant Protection Act, a particular tenancy or other California real estate legal matter, a legal consultation may be appropriate.

Selling, Holding or Leasing? Sometimes the Best Decision Isn’t Obvious

Coastal Orange County owners often come to us before they have decided what they want to do.

“Should I sell the house?”

“Should I keep it as a rental?”

“What could I rent it for?”

“What would it sell for?”

“What happens to my property taxes?”

“What about capital gains?”

“Can I do a 1031 exchange?”

Those are exactly the conversations worth having before making a major real estate decision.

A property that has appreciated dramatically may present capital gains considerations. An investment property may create potential 1031 exchange opportunities. A family property may raise trust, estate, title or property-tax issues. And a rental property may have tenant-protection questions that should be evaluated well before a sale.

Sometimes selling makes sense.

Sometimes holding does.

And sometimes the answer changes once you actually see the numbers.

Newport Beach & Costa Mesa Property Management

For owners who decide to hold, professional management can take much of the work out of owning a rental property.

Lucas Real Estate Group provides full-service property management in Newport Beach, Costa Mesa and surrounding Orange County communities, including leasing, tenant screening, rent collection, maintenance coordination and ongoing property oversight.

Our approach is particularly well suited to owners who want more than basic rent collection.

Real estate ownership can involve leases, tenant notices, LLCs, insurance, property taxes, HOA issues, maintenance, long-term planning and eventually a sale or transfer.

Having those pieces working together can make property ownership much easier.

Real Estate + Legal + Tax Knowledge Under One Roof

Real estate decisions rarely happen in a vacuum.

That is especially true in Newport Beach and coastal Orange County, where a single property may represent millions of dollars of family wealth.

Devin R. Lucas is a California Real Estate Broker, REALTOR® and Real Estate Attorney. Courtney Lucas is a REALTOR®, Real Estate Salesperson and licensed CPA.

Together, Lucas Real Estate Group brings a multidisciplinary perspective to real estate sales, property ownership and investment decisions.

Our real estate practice includes traditional home sales and purchases, luxury real estate, investment properties, property management, trust and estate sales, family transfers, private transactions and other complex real estate matters.

We work in partnership with Coldwell Banker Newport Beach and Coldwell Banker Global Luxury, combining local experience with national and global marketing reach.

Most importantly, we live, own and work in the communities we serve.

From Newport Beach and Eastside Costa Mesa to Corona del Mar, Newport Coast, Dover Shores, Newport Heights, Lido Isle, Bayshores, Peninsula Point, Mesa Del Mar, Westcliff and surrounding Orange County communities, this is our market.

What Should Orange County Landlords Do Now?

If you are considering a rent increase after August 1, 2026, start with three questions:

Is my property covered by the Tenant Protection Act?

What is the maximum lawful increase for this particular tenancy?

What is the property actually worth in today’s rental market?

For covered Orange County properties, 8.7% is the statewide TPA ceiling for increases taking effect August 1, 2026 through July 31, 2027. But the right increase for your property could be lower—and an exempt property may be governed differently.

The number is easy.

The strategy is where the value is.

Questions or Need Help?

Thinking about selling, leasing or professionally managing a home in Newport Beach, Costa Mesa or the surrounding Orange County coastal communities? We would love the opportunity to help.

Lucas Real Estate Group provides full-service residential sales and property management, backed by a unique combination of real estate brokerage, legal and tax knowledge.

If you would like a complimentary market evaluation, rental analysis, or conversation about selling or managing your property, call 949-478-1623 or email info@lucas-real-estate.com.

For real estate legal advice and strategy, private family sales, family transfers, entity structuring, or tax-related matters requiring individualized analysis, please contact us to schedule a paid consultation.

Sign up for our newsletter for Orange County real estate updates, property-owner insights, market news and California real estate law and tax developments.

— Devin Lucas

About the Authors

Devin R. Lucas is a Real Estate Broker, REALTOR® and Real Estate Attorney specializing in Newport Beach, Costa Mesa and Orange County coastal communities. Courtney Lucas, a licensed CPA, Real Estate Salesperson and REALTOR®, provides financial insight alongside the team’s real estate services.

Together, they lead Lucas Real Estate Group, operating in partnership with Coldwell Banker Newport Beach and Coldwell Banker Global Luxury.

Lucas Real Estate Group assists clients with California real estate sales, purchases, property management, investment properties, trust and estate sales, real estate legal matters, capital gains strategies and California property-tax issues.

Contact Lucas Real Estate Group
info@lucas-real-estate.com | 949.478.1623

Sources & Legal Authorities

California Civil Code § 1947.12 — Statewide Rent Cap / Tenant Protection Act. The statute generally limits covered rent increases to 5% plus the applicable percentage change in cost of living, or 10%, whichever is lower. It also establishes the calculation methodology, exemptions and other requirements discussed above.

California Legislature — Civil Code § 1947.12

U.S. Bureau of Labor Statistics — Consumer Price Index, Los Angeles Area, April 2026. BLS reported a 3.7% year-over-year increase in the Los Angeles–Long Beach–Anaheim CPI-U for April 2026 and confirms that the statistical area includes Los Angeles and Orange Counties.

U.S. Bureau of Labor Statistics — April 2026 Los Angeles Area CPI

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