What is the standard for raising rent?

General Landlording & Rental Properties
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What is the standard for raising rent?

David OunanianBusiness Member
Real Estate Broker · St. Louis, MO · Member since 2017 · 380 posts · 195 votes

The standard for raising rent varies depending on local laws, regulations, and rental agreements. However, there are some general guidelines and considerations that landlords typically follow:

Check local laws: Different regions have different laws regarding rent increases. Some areas may have rent control ordinances that restrict how much landlords can increase rent and how often they can do so.

Review the lease agreement: The terms of the lease agreement signed by the landlord and tenant usually outline the conditions for rent increases. If there's a fixed-term lease, the landlord typically can't raise the rent until the lease term expires, unless there's a specific provision allowing for increases. It can be smart to add a "rent escalation clause" that says rent will be increased by 3% every 12 months to compensate for inflation.

Provide notice: Landlords typically need to provide tenants with advance notice before raising the rent. The amount of notice required can vary by location and may be specified in local laws or the lease agreement.

Justify the increase: Landlords may need to provide a reason for the rent increase, especially in areas with rent control or other regulations. Valid reasons might include increased operating costs, property improvements, or market trends.

Fairness and market rates: Rent increases should generally be reasonable and in line with market rates for similar properties in the area. Landlords should consider factors such as the condition of the rental property, local rental market conditions, and any amenities or services provided. Make sure to look at what recent comparable properties are renting for to justify your increase.

Communication: It's important for landlords to communicate openly and transparently with tenants about rent increases. This includes providing clear explanations for the increase and being responsive to any questions or concerns raised by tenants.

Avoid retaliation: Landlords should not raise rent in retaliation against tenants for exercising their legal rights, such as requesting repairs or reporting code violations. Doing so may be considered illegal retaliation and could lead to legal consequences.

It's crucial for both landlords and tenants to be aware of their rights and responsibilities regarding rent increases to ensure a fair and legal process is followed. Consulting with a legal professional or local housing authority can provide further guidance specific to your location and situation.

Thanks,

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  • David Krulac
    Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
    2y

    Fortunately, we have never had a rental anywhere that there was rent control, and if rent control is ever started in anyplace we have rentals we will sell out.  When expenses rise, which is almost always in one form or another, we are forced to raise rents.  We do positive actions like insulate, install new windows, and install high efficiency heaters and appliances. We also have all of our tenants pay their own heat and electric.  We have eliminated oil heat and electric baseboard heat because of their high cost of operation.  We have insulated higher that the standards for new built houses, as heat costs rise, this move pays more and more.

    We look at what other owners are charging for rent via Craigslist, Zillow, Rentometer and Rentcast, and always look at HUDuser.org for the HUD Median rents. In most cases our rentals are above the HUD Median Fair Market Rent, which means we're in the top 50% of rents. Most of our rentals have central air conditioning, multiple baths, and garages, often two car. One time we bought a 3 bedroom property where the rent was $550. We had to accept that rent for the remainder of the current lease. We advised the tenants 3 months before the lease expired that the rent was going to be raised $200. We had done our research and a $200 increase was still well below the Median fair market rent. We suggested the tenant look in the market place and find a place that fit their desired rent. After searching for the 3 month, they could not find even a single 3 bedroom place that was less than $750. They signed a new lease and stayed more than 3 years until they bought a residence. We seldom have vacancies and have tenants stay for long times, we've had tenants stay up to 31 and 39 years.

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  • David OunanianBusiness Member
    OP
    Real Estate Broker · St. Louis, MO · Member since 2017 · 380 posts · 195 votes
    2y
    Quote from @David Krulac:

    Fortunately, we have never had a rental anywhere that there was rent control, and if rent control is ever started in anyplace we have rentals we will sell out.  When expenses rise, which is almost always in one form or another, we are forced to raise rents.  We do positive actions like insulate, install new windows, and install high efficiency heaters and appliances. We also have all of our tenants pay their own heat and electric.  We have eliminated oil heat and electric baseboard heat because of their high cost of operation.  We have insulated higher that the standards for new built houses, as heat costs rise, this move pays more and more.

    We look at what other owners are charging for rent via Craigslist, Zillow, Rentometer and Rentcast, and always look at HUDuser.org for the HUD Median rents. In most cases our rentals are above the HUD Median Fair Market Rent, which means we're in the top 50% of rents. Most of our rentals have central air conditioning, multiple baths, and garages, often two car. One time we bought a 3 bedroom property where the rent was $550. We had to accept that rent for the remainder of the current lease. We advised the tenants 3 months before the lease expired that the rent was going to be raised $200. We had done our research and a $200 increase was still well below the Median fair market rent. We suggested the tenant look in the market place and find a place that fit their desired rent. After searching for the 3 month, they could not find even a single 3 bedroom place that was less than $750. They signed a new lease and stayed more than 3 years until they bought a residence. We seldom have vacancies and have tenants stay for long times, we've had tenants stay up to 31 and 39 years.


     Thanks for sharing David!   Yes likewise I have never owned in a rent control area.  I'm certain it would be difficult for a small business owner to stay profitable as expenses are always on the rise.  I assume the market would then be flooded with big corporate investors as landlords.  May or may not be good for the tenant base.

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