Raising rent on inherited tenant but need help with CPI

[Megan Brooks]

Hi,

I'd like to raise the rent on an inherited tenant. I'm sending her a letter with the proposed increased 60 days prior to her lease ending. She currently pays $1050/month but market value is about $1500. I'm thinking a $250 increase is a reasonable middle ground; however, I came across this statement in my town's code:

At the expiration of a lease or at the termination of a lease of a periodic tenant, no landlord may request or receive a percentage increase in rent which is greater than the percentage increase in the consumer price index for the past calendar year prior to the termination of the lease.

How exactly can I figure out what's allowable for this rent increase? Any advice is appreciated!

Thanks,

Megan

[Carl Millsap]

@Megan Brooks I'm not a lawyer, and this answer is probably more than you asked for but work with me...... 

You can put her on a month to month, 3 month or 6 month lease and step it up at the end of each period per the CPI. This way it works within the boundaries of the law, you get your increase and the tenant still saves. 

It's a little tedious in that you would have to "renew" the lease every month, or 3 to 6 months, but it doesn't lock you into a 1-2.5% rent increase for a year which is what I think the CPI increased last year.

Again, consult with an attorney or qualified professional but I think the above is well within the law. 

The other option is to not renew the tenant's lease let them move and lease it at market rate. Not an ideal option, as I prefer to keep our tenants even at slightly lower than market rate.