Guidelines for Raising Rent

When raising a tenant’s rent, landlords have much to consider. There are several legal and practical considerations when raising a tenant’s rent. This article provides guidelines to help you comply with the legal standards when increasing rent. This can help keep an excellent landlord-tenant relationship with their tenants. 

This article is an overview of some standard rules. State laws and county laws determine many landlord-tenant rules and regulations. Also, every lease agreement and rental property are different. If you are considering raising rent, contact a local, experienced rental agreements lawyer.

Know State and Local Rules 

It would be best to familiarize yourself with landlord-tenant laws and regulations in your area before raising rent. Many cities, counties, towns, and states have their own rent control laws. Many states have rent restriction laws that limit how much and how often a landlord can raise the rent.

For example, California law says landlords cannot increase rent by more than 10% total per year or 5% plus the percentage change in the cost of living—whichever is lower. However, even in California, other cities have more restrictive rent hikes.

Most jurisdictions require landlords to give tenants a certain notice period before any rent increase. This may depend on the lease term. This is usually between 60 and 90 days’ notice for rental agreements for a year or more. Month-to-month leases generally require 30 days’ notice.

If you violate these local laws, defending yourself from tenant lawsuits can be expensive. It can also cause reputational damage for the property management.

When Not To Raise Rent 

Landlords need to understand the right timing for a rent increase. Generally, you cannot increase monthly rent during a fixed-term lease unless the lease agreement says otherwise. A landlord may also consider the current economic conditions and the rental market. Raising rent too much could lead to higher vacancy rates.

Legal Considerations for Raising Rent

Landlords must determine when they can raise the rent. This includes providing renters with proper notice of rent increases, as required by law. The notice should be in writing and state the amount of the rent increase and when it will take effect. 

Some rent stabilization laws govern how much landlords can increase rent. However, 33 states prohibit local governments from controlling rent.

For example, Arizona has no limit on rent increases. Local municipalities cannot implement controls. Landlords do not even have to give a reason for a rent increase. On the other hand, Pennsylvania has no statewide limits, but local municipalities can implement rent control. Specific rules and limitations can vary widely even in states where rent control is allowed, so it’s best to consult a lawyer with localized experience.

Landlords and property management companies must also keep thorough records. Landlords should document and keep copies of communications with tenants regarding rent increases. 

Legitimate Reasons for Rent Increases 

Some cities require landlords to provide a reason for a rent increase. This is usually to prevent discriminatory and retaliatory rent practices. The reasons for rent increases should be included in the rental increase notice. Some legitimate reasons for raising rent are:

• Rising property taxes
• Increases in the cost of maintenance and repairs
• The landlord has made significant improvements to the rental unit

How To Calculate Rent Increases 

Without a specific formula or limit provided by your city or state, landlords must determine the amount of a rent increase on their own. Landlords should consider current market rates for similar properties, the condition of the real estate, and any recent improvements. A common approach is to apply a universal percentage increase. A typical increase rate is between 2% and 4%. However, the specific percentage will depend on location conditions. 

How To Notify Tenants of Rent Increases 

Notifying tenants of rent increases can be stressful. Rent increases are serious for most renters. Send tenants the rent increase notice in writing. Include all relevant details of the rent increase, such as the new rent amount, the date the increase will take effect, and the reason for the rise. Landlords should also be available to discuss the rent increase with tenants. 

Contact a Landlord-Tenant Lawyer 

Making a mistake when raising rents can have legal and financial consequences. To ensure you comply with all local rent increase laws, consult a local and experienced rental agreements attorney.