When Can A Landlord Raise The Rent?
When can I raise the rent? Are there rules on how much of an increase I can charge?
Answer
Absent any rent control restrictions, a landlord’s right to raise rents depends upon whether a tenant has a fixed-term lease agreement or has a month-to-month rental agreement.
Raising rent for an existing tenant is a somewhat different issue than setting the rent for a vacant unit.
When considering whether to raise the rent for existing tenant, whether for extension or renewal of a long-term lease or with proper notice for a month-to-month tenant, there usually can be no specific criteria other than some basic principles and each case must be considered on an individual basis.
The decision for a specific case must be based on a number of factors, including:
- The known and unknown possible issues regarding condition of the unit,
- Local market conditions,
- The current rent compared to market, and
- The known history of the existing tenant compared to the uncertainty of the next one.
The most basic thing that must be considered is what amount of increase would motivate the tenant to move.
Tenants will usually not leave over a reasonable increase that still leaves the rent slightly under market because moving is costly in a number of ways including the following:
- It requires time and expense to locate an acceptable new unit,
- There will usually be some overlap in tenancy, meaning a period of paying rents and utilities for both units,
- Time and money will be required to make the physical move,
- Time and effort will be required to clean the old unit,
- Acceptable replacement unit might be as high as or higher than the current unit,
- Significant funds will be required to pay the security deposit and first month’s rent for the new unit,
- Phone and utility transfer costs,
- There is a possibility that some or all of the old security deposit will not be returned, and
- The new landlord may turn out to be less tolerant than the old landlord.
How large a percentage rent increase will trigger a move depends on a number of factors, including:
- The current market situation as seen by the tenant,
- The income and assets of the tenant,
- How busy the tenant is with employment, business, and/or social involvements, and
- The personality of the tenant.
Larger rent increases can often be justified because of property improvements or added amenities.
It is almost always true that it is better to give periodic small increases rather than large occasional ones. This is primarily because no single small increase will be sufficient to trigger a move.
The percentage of increase that should be given depends on a number of factors including the following:
- The time since the last increase,
- How far the subject rent is below current market rent,
- The rate at which rents are rising,
- The known quality of the current tenant compared to the unknown, but likely, quality of a replacement tenant considering current market conditions, and
- The landlord’s tolerance for a vacancy.
Landlords are prohibited from raising rents as retaliation against a tenant exercising a legal right and/or raising rents in a discriminatory manner.