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What Are The Rules On Raising The Rent?

By
Real Estate Broker/Owner with Kolsky Realty & Management 01311273

 

What Are The Rules On Raising The Rent?

 

 

 

 

Are you renting “or” are you planning on becoming a renter? If so, you should know the rules about rent increases. Those that rent will tell you “rent increases are never fun.” Yet, most renters (when it’s time to renew their lease) have to hold their breath in hopes their rent doesn’t increase (and or) the rent increase is still within their budget, especially for those that love where they live and want to stay put.

 

When it comes to raising the rent – most landlords will go by the book and will play by the rules. Although, some landlords don’t play by the rules leaving tenants vulnerable and wondering: What are the rules on raising the rent?

 

To give renters a peace of mind – here are some answers about landlords raising rents:

 

Can landlords raise rent whenever they want? Thankfully, landlords can’t just raise your rent as they wish. Landlords have to wait until the signed contract expires. Meaning, they can’t raise the rent until the term expires on your mutually agreed lease. Those that sign a one-year lease agreement can’t endure a rental increase until the end of one-year. And same goes for a two-year lease, three-year lease, and so on; the landlord must wait until the term of the lease ends before bumping up the rent (which is why signing a longer lease is prudent to keep down rent). For those renting month to month, (as you might have guessed) at the end of any given month your rent can’t go up as long as the landlord follows certain protocols and gives the tenant a proper rental increase notice.

 

So how much notice in advance should a landlord give a tenant when increasing the rent? It varies from state to state, but in most states, landlords are legally bound to give tenants at least a 30-day notice of a rent increase, but even that may vary based on how high the landlord intends to hike up the rate. And in California, the timeframe of 30 days expands to a 60-day notice if the rent increase amounts to more than 10% of the rent. Even for “tenant at will” (i.e., you do not have a lease) and (more astoundingly) a tenant renting a room in a house paying weekly rent; the same rules apply.

 

How much can landlords legally bump up the rent? In most cases (when it comes to raising the rent) it is up to the landlord's discretion, and there are no rules (with exceptions.) If you live in a rent-stabilized (and or) live in a rent-controlled apartment, there are strict government provisions in place as to how much rent can be raised “if” it can be increased at all. But don’t get too excited. Finding one of these apartments is sort of like finding a needle in a haystack. And chances are “if” you don’t know if you have a rent-regulated apartment, most likely you do not. Also. It is important to note that a landlord can’t raise the rent to punish a renter. For example, the landlord can’t raise the rent just because the tenant contacted the Board of Health for a health code violation. A landlord who raises the rent in such a way is definitely on the wrong side of the law and could be made (if found guilty) to pay as much as triple damages and court costs.

 

So, what should a renter do if they think their landlord illegally raised the rent? First off, don’t just assume anything. Most landlords play by the rules, but if “for some reason” your landlord isn’t playing bu the rules; you need to be vigilant. It is vital that you keep track of every correspondence, take pictures, along with keeping track of the dates of each communication and taking notes, especially when communication is verbal. Keep in mind “if” you need to go to court, you’ll need to prove all claims.

 

Overall, the vast majority of renters never have to deal with landlords not playing by the rules. But, no matter what “all” renters should understand “all” of their rights to rent. It is also important to remember that tenant communication with the landlord is very important. It is also important to remember that even though renters have certain rights, at the end of the day, the landlord owns the property. And if the landlord chooses, the landlord is entitled to find a new tenant once the tenancy expires.

 

For more information about rent increases in California, you can visit CA.Gov Consumers Affairs 

 

Comments(37)

Frank Rubi
Frank Rubi Real Estate, LLC - Metairie, LA
FrankRubiRealEstate.com

Jon, great point of reference for both owner's and renter. I have not increased any of my properties rents more than 10% during renewals. Keep in mind, my thought is to raise rents but not enough to run off a good tenant. The one thing I would add is to encourage both parties to place in writing all communications. Great post. 

Nov 30, 2016 04:14 AM
Sham Reddy CRS
Howard Hanna RE Services, Dayton, OH - Dayton, OH
CRS

Great question!!!

There are no rules on raising rents.  Just some common industry practices.  Of course, it with a written notice 30-60 days before the expirtion of exisiting lease.  Rule of thumb 5%

Nov 30, 2016 04:49 AM
Chris Lima
Turtle Reef Realty - Port St Lucie, FL
Local or Global-Allow me to open doors for you.

This is a fantastic post for the, usally forgotten about, renters.  Thankfully, most landlords appreciate good tenants.

Nov 30, 2016 05:24 AM
Lyn Sims
Schaumburg, IL
Real Estate Broker Retired

Good to know rules for tenants. Still it's left to the landlords discretion. I'm not sure the rule of thumb is 5% as stated above. That seems too high for my Midwest area.

Nov 30, 2016 05:25 AM
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Landlords;  Lord of the Land...they have the gold and they rule. Finding one that is fair is rewarding. Tenants can be a type of gold too. A matched pair is bliss

Nov 30, 2016 07:27 AM
Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

Dorie Dillard ~ thank you! I agree, and if I was a renter (in CA) I would definitely seek a long-term lease to keep from getting an unwanted rent increase

Evelyn Kennedy ~ the Bay area rents are through the roof, but I don't know if rent control is the answer. The problem with rent control is two-fold. First, folks that live in a rent control building don't move, so that doesn't help new renters looking for affordable housing. Second, landlords won't invest and improve their building because they no they won't recoup the money spent. The best local example of rent control not working is in an area called Santa Monica, and because of the lack of success in Santa Monica, other local cities won't adopt rent control

Nov 30, 2016 09:31 AM
Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

Myrl Jeffcoat ~ so true! Renters and landlords alike need to know the local rules so they are better protected as needed

Dörte Engel ~ to a point I agree. But even with good long-term tenants, landlords should be aware of market rents and act accordingly. I also think it depends on the market, too! In my market, the rental housing inventory is low and rental demand is high. I have no problem finding good renters so why would I leave money on the table by not getting market rents? I have over 250 individual doors so $50 x 250 x 12 = $150k a year.  No matter what, I do feel lucky and I am always nice to my tenants. They deserve a nice place to live and I feel I deserve to fairly be compensated as the market presents itself 

Nov 30, 2016 09:58 AM
Dorte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton & rest of Maryland

Dear Jon,

Wow, if you put it like that, it sure adds up. I still like adjusting the rent, when there is a changeover, if you priced it right to start. Most tenants do not stay much more than 2-3 years anyhow.

Nov 30, 2016 10:04 AM
Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

Olga Simoncelli ~ I agree with you 110%

Ken Rohn, REALTOR®, GRI ~ I happen to rent month to month with all my tenants. My logic is "if" I'm not happy with a tenant I'm not stuck with them for a year (or more) and the same goes for the tenant "if" they are not happy living in my building I don't want them stuck, as well! I'm upfront with all my tenants. I tell my tenants that I won't raise their rent in the first year, but I tell them at the end of one year I will revisit the rent. This system has worked well for me over the years and I have many long-term tenants. I even have multiple tenants that have been with me over 10 years.  

With that said, I know many landlords that do it the way you explained and they are very successful, too! Both ways can work as long as both sides communicate and both sides are fair to each other

Nov 30, 2016 10:12 AM
Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

Frank Rubi ~ thank you and I agree! Landlords never want to run off good tenants, and when landlords are fair they won't. Your system seems fair, and in most cases (as long as you start the tenant off at market rent) you'll never have to increase the rent more than 10%.

 

Nov 30, 2016 10:21 AM
Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

Sham Reddy ~ Hmmm? As far as I know - when it comes to raising the rent, there are rules and regulations to follow

Chris Lima ~ thank you! And I agree "a smart landlord appreciates a good tenant

Nov 30, 2016 10:26 AM
Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

Lyn Sims ~ true, a landlord can raise the rent (under the rules and regulations) at their discretion, and I also think that depending on each market comes with limitations. Set the price too high and the landlord won't be in business too long

Richie Alan Naggar ~ well said, young man! And isn't a matched pair so beautiful? 

Nov 30, 2016 10:35 AM
Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

Dörte Engel ~ I get it. With that said, most of my tenants stay with me over 3 years, and if I don't review and adjust rent on a yearly basis I would be leaving a lot of money on the table. Overall, it varies state to state area to area, but there's no right way "or" wrong way as long as you remain fair 

Nov 30, 2016 11:02 AM
Mike Bjork
Evolve Bank & Trust - Redondo Beach, CA

Thanks, Jon!  I've always kind of wondered that myself.  Especially in the LA area with some of the Rent Control restrictions.  Typically, I would think that the landlord will want to keep good tenants, so most are reluctant to raise rent all that often for those tenants.

Nov 30, 2016 11:44 AM
Dorte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton & rest of Maryland

Dear Jon,

Lucky you. That would be a great problem to have. Our area seems more transient.

Nov 30, 2016 12:05 PM
Evelyn Kennedy
Alain Pinel Realtors - Alameda, CA
Alameda, Real Estate, Alameda, CA

Jon:

Rent control is not the answer, but we're stuck with it in Alameda.  Hopefully, not for good.  As a Realtor and landlord I don't like rent control at all.  

Nov 30, 2016 12:28 PM
Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

Mike Bjork ~ thank you! I can't speak for other landlords, but even my best tenants will receive rent increases as needed. One of the things I keep track of is market rent prices, and I do my best to make sure I'm not under rented for too long. The way I see, if the tenant wants to leave they will be paying the same rent elsewhere and as long as I provide a nice place to live they understand and usually don't want to leave 

Dörte Engel ~ when I first got into the business back in 1990, rents were at an all-time low and vacancy factors were above average. So, it was a whole different ball game back then. I even remember holding open houses and giving the first-month free to entice would-be renters, so it wasn't always so rosy. Thankfully, those days are long gone

Nov 30, 2016 01:42 PM
Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

Evelyn Kennedy ~ I agree 110% "rent control is not the answer to affordable housing." And I have a feeling the cities that pass such regulations are stuck with it most probably forever "or" at least for our lifetime.  

The problem with rent control "owners don't upgrade their buildings and the area deteriorates (which in turn jobs are lost, materials aren't purchased, and cities don't receive fees.) Also, it slows down if not halts the buying/selling of buildings, too. BTW: which is a fortune in lost revenue and lost tax dollars.

The real answer for affordable lies with the cities themselves. They need to use/find/buy property and build affordable housing. Long Beach does a great job doing this, they usually end up rezoning property they own "or" buy property and rezone it for affordable housing, then they build affordable housing

Nov 30, 2016 01:59 PM
Evelyn Kennedy
Alain Pinel Realtors - Alameda, CA
Alameda, Real Estate, Alameda, CA

Jon:

What you say is exactly what will happen.  Ugh!

Nov 30, 2016 04:49 PM
Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

Evelyn Kennedy ~ sorry to be such a downer, but it is a fact that rent control is a major failure and doesn't work. 

Dec 01, 2016 09:25 AM