Don't Raise Rent Before Reading This
Before you increase rent prices, be aware of your state laws. In this article, we discuss a few commonly asked landlord questions.
The landlord-tenant laws on raising rent depend on a rental property’s location. Each state has its own collection of statutes that regulates when and how landlords can raise rent prices, and many landlords may be uncertain about what to do when the time comes.
Month-to-Month vs Lease Tenancy
Inexperienced landlords often ask if they can increase rent for a month-to-month or a lease tenancy. If your tenant has a lease, terms of tenancy are fixed for the length of the lease, so you cannot raise rent during that period on a whim. You may be able to change the rent amount if the original lease includes language allowing such changes or if you and the tenant agree to and sign an amendment. Otherwise, you will most likely have to wait for the end of the lease to charge higher rent or change the terms.
In a month-to-month agreement, there is no limit on how much and how often you can raise rent prices in most areas without rent control, but you must provide notice to your tenants beforehand.
Raising the Rent for Month-to-Month Agreements
For a month-to-month tenancy, you do not need consent, but you must provide your tenants ample notice—around 30-60 days—before increasing the rent. In some states, depending on the percentage difference between the original rent price and the new one, you may have to give 60 days’ notice. For example, in California, landlords must provide tenants at least 30 days’ notice to increase rent. If the rent increase is more than 10% of the lowest rent charged during a 12-month period, then landlords must give 60 days’ notice.
The method of how a notice is delivered also varies. Some state statutes require a written notice.
Find out what your state’s statutes say about changing or terminating a month-to-month tenancy.
By How Much Can a Landlord Increase Rent?
In areas with rent control, landlords can only raise rent according to the rules set by the municipality in which the property is located. For example, in some areas of California, landlords can raise rent by certain amounts according to the regional consumer price index. This is the case in Berkeley where the rent ceiling for units under rent control is adjusted once per year by 65% of the regional CPI. Additional increases require a petition from a local rent regulatory agency.
If there is no rent control, then there is no limit on how much rent you as a landlord can charge. You can raise rent at your discretion and often, but common business sense and the local market typically cap the amount. By raising rent beyond what the market can bear, you risk losses, vacant units, and angry tenants.
Nolo states that in most areas without rent control, there is no limit on the amount your landlord can increase the rent. But landlords cannot raise the rent at whim. The timing of a rent increase, and the way your landlord communicates it, are governed in most states by statutes.
How to Avoid Retaliation or Discrimination Claims
It is never legal to raise a tenant’s rent in retaliation to a legitimate complaint or to discriminate, for example, based on race or religion. Also, it is important to be mindful of the timing of a rent increase. Many states may make a presumption of retaliation if you raise rent too soon. For example, retaliation can be presumed if a landlord raised rent within a specified time such as 90 days or 6 months of a tenant complaint. To protect yourself from retaliatory claims after a coincidental complaint, adhere to a sensible and consistent rent policy. One method is to increase rent uniformly for all tenants or raise each tenant’s rent based on the Consumer Price Index on the anniversary of their move-in date.
Here are some other methods for raising rent:
- Raise rent incrementally each year.
- Lock in a longer lease with a smaller increase in rent than non-locked leases.
- Give tenants options of month-to-month, 6-month lease, and 1-year lease, where shorter leases cost more.
Each state defines their own rules, so it is up to you as the landlord to find out what they are and follow them. It is most likely that your state prohibits you from raising rent without notice. Lastly, to avoid retaliation or discrimination claims after raising rent, inform tenants in advance, stick to a sensible rent increase policy, and raise rent fairly for all tenants.
Don't forget to think of ways you can make it easier for your tenants to pay rent. Download the Tellus superapp from the App Store or Play Store and see how simple it is to collect rent online.