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How Much & How Often Can Rent Be Raised?

217 views January 11, 2024 Karina Jugo 4

The frequency and amount of rent increases for residential properties are typically subject to local laws and regulations, as well as the terms of the lease agreement between the landlord and tenant. For instance, here in Georgia—where RentPost is headquartered—there is no state-wide rent control law that governs how much and how often rent can be increased. Instead, rental regulations here are generally more landlord-friendly, allowing landlords significant flexibility in setting and increasing rent.

In contrast, California has specific rent control laws known as the Tenant Protection Act of 2019 (Assembly Bill 1482), which govern how much and how often rent can be increased for certain residential properties. Under AB 1482, landlords can typically increase rent by no more than 5% of the current rent plus the local rate of inflation, or 10% of the current rent, whichever is lower, in any 12-month period.

AB 1482 applies to most residential rental properties in California, with some exceptions. Single-family homes and condos that are not owned by corporations or real estate investment trusts (REITs) and properties built within the last 15 years are generally exempt from the law. Some local jurisdictions may also have their own rent control laws that apply to a broader range of properties. Moreover, local rent control ordinances in cities like Los Angeles, San Francisco, and Oakland may have additional or more stringent rent control regulations.

rent increase notice

Rent Increase Guidelines

While there is no universal rule for how often rent should be raised, here are some general guidelines:

  1. Check Local Laws: First and foremost, it’s crucial to be aware of and adhere to any rent control or rent stabilization laws in your area. Some jurisdictions limit how often and by how much landlords can increase rent for residential properties. Violating these laws can result in legal penalties.
  2. Lease Terms: If your tenant has signed a fixed-term lease, such as a one-year lease, you generally cannot raise the rent during that lease period unless the lease explicitly allows for it. However, once the lease term expires, you can negotiate a rent increase with the tenant if you wish.
  3. Month-to-Month Tenancy: If your tenant is on a month-to-month lease or rental agreement, you may be able to increase the rent with proper notice, as required by local laws. Typically, 30 days’ notice is common, but this can vary depending on your location.
  4. Be Reasonable: When raising rent, it’s essential to be fair and reasonable. Excessive rent increases can lead to tenant turnover, which can be costly for landlords. Consider the current market conditions, the condition of the property, and the tenant’s payment history.
  5. Tenant Communication: It’s a good practice to communicate with your tenants well in advance of any planned rent increase. This allows them to plan their budgets accordingly and may help maintain a positive landlord-tenant relationship.
  6. Incremental Increases: Rather than making significant annual increases, some landlords prefer to implement smaller, more frequent raises. This can make the increases more manageable for tenants.
  7. Renovations and Improvements: If you’ve made significant improvements or renovations to the property that justify a rent increase, be sure to follow local regulations and provide proper documentation to support the increase.
  8. Rental Market Analysis: Keep an eye on the local rental market and adjust your rent accordingly. If rents are rising in your area, it may be reasonable to increase your rent to stay competitive.

Remember that the specifics of rent increases can vary widely depending on your location, so it’s essential to familiarize yourself with local rental laws and regulations and consult with legal or real estate professionals if you have any questions or concerns. Always provide written notice of rent increases as required by law and your lease agreement, and keep a record of all communications with your tenants regarding rent adjustments.

rent control law

Where can I find rent control laws specific to different states in the US?

Rent control laws in the United States vary significantly from state to state and even within municipalities. To find specific information about rent control laws in different states, you can start by using the following resources:

  • State Government Websites
    Many states provide information about landlord-tenant laws, including rent control regulations, on their official government websites. Search for your specific state’s official website and look for information related to landlord-tenant regulations or rent control.
  • Local Government Websites
     In some cases, rent control regulations are established by individual cities or counties rather than at the state level. Check the website of your city or county government for information on local rent control ordinances.
  • Legal Aid Organizations
    Local legal aid organizations often provide resources and information about landlord-tenant laws, including rent control, on their websites. They may also offer assistance to tenants and landlords dealing with rent control issues.
  • Tenant and Landlord Associations
    Tenant advocacy groups and landlord associations often provide information about rental regulations, including rent control. These organizations may have resources and guides specific to your state or city.
  • Legal Research Websites
    Online legal research platforms like Nolo, LegalZoom, or Justia may provide summaries of state-specific landlord-tenant laws, including rent control where applicable. These websites can be helpful for gaining a general understanding of the laws in your state.
  • Consult an Attorney
    If you have specific questions or concerns about rent control laws in your area, it’s advisable to consult with an attorney who specializes in landlord-tenant law. They can provide you with personalized guidance and ensure you are in compliance with local regulations.

Remember that rent control laws can change over time, so it’s essential to verify the most up-to-date information from reliable sources, such as government websites or legal professionals. Additionally, keep in mind that not all states or cities have rent control ordinances, and the regulations can vary widely even in areas that do have them.

Should you or shouldn’t you raise rent?

Deciding whether or not to raise rent in a residential property is a critical decision that requires careful consideration. Several factors should influence this decision:

  1. Market Conditions: Assess the current rental market in your area. If demand is high and vacancy rates are low, you may have more flexibility to increase rent. Conversely, in a saturated market with high vacancy rates, raising rent may drive tenants away.
  2. Local Rent Control Laws: Research and understand local rent control or rent stabilization laws. In some areas, there are strict regulations on how much and how often you can increase rent. Violating these laws can result in legal consequences.
  3. Tenant Retention: Consider the value of keeping your current tenants. High tenant turnover can be costly due to vacancy periods and turnover expenses. Raising rent too much or too frequently can lead to tenant dissatisfaction and turnover.
  4. Property Condition: Assess the condition of your property. If you’ve made significant improvements or renovations that enhance the tenant’s experience, it may justify a rent increase. Highlight these improvements when communicating with tenants.
  5. Operating Expenses: Review your operating expenses, including property taxes, maintenance, insurance, and utility costs. If your expenses have significantly increased, you may need to raise rent to maintain a profitable investment.
  6. Local Economic Factors: Consider the local economy, job market, and inflation rate. These factors can impact tenants’ ability to absorb rent increases. An increase that outpaces local wage growth may lead to financial strain on tenants.
  7. Tenant Payment History: Evaluate your tenants’ payment history. If they consistently pay rent on time and take good care of the property, you may want to reward their responsible behavior by keeping rent stable or raising it modestly.
  8. Communication: Open and transparent communication with tenants is essential. Inform them well in advance of any planned rent increase and explain the reasons behind it. Good communication can help maintain a positive landlord-tenant relationship.
  9. Legal Compliance: Ensure that any rent increase complies with local, state, and federal laws. Provide the required notice in writing and within the legally mandated timeframe.
  10. Market Research: Research comparable rental properties in your area to determine if your rent is competitive. If your rates are significantly below market value, a moderate increase may be justified.

 

Afterword

The decision to raise rent should be well-informed, taking into account market conditions, legal regulations, tenant satisfaction, property improvements, and economic factors. Striking a balance between maintaining profitability and retaining quality tenants is key to making sound rent increase decisions.

Authors

  • Karina Jugo

    Karina Jugo is a content administrator at RentPost who works directly with real estate and property management experts to create resources and guides for property managers. She has more than 15 years of experience in content research and writing for various industries.

  • Jacob Thomason

    Jacob Thomason is the CEO and co-founder of RentPost, software platform providing property managers, landlord or owners with the tools necessary for property management. Jacob is a software entrepreneur with with a vast array of expertise ranging from business concept design to software architecture and development. He is running RentPost for more than 14 years and helping property managers and property owners.

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