Rent increases are common occurrence when leasing an apartment. Your rent renewal period is coming up and you’re prepared to renew the lease, but you may be concerned about the potential cost of a rent increase. You could also be wondering if your property manager has a right to increase your rent and by how much they can increase your monthly total. Learning the standards of rent increase, including when and by how much a property manager can raise your price, can help you navigate the lease renewal process.
The guidelines for a rent increase
It is possible for a property manager to increase your rent to any amount. However, rent control laws may set a limit on how much the rate may increase over time.
You can also review the standard rent increase percentage in your area, but there isn’t a law that requires property managers to follow this calculation. That said, they must notify you in advance of any increase.
When can a property manager not increase the rent?
There are a few situations in which a property manager can’t increase rent. A few of these reasons include:
- To punish the renter: A property manager cannot increase rent to seek retribution or to punish a renter. For example, if you contact the Board of Health for a violation, the property manager cannot retaliate by increasing your rent. The problem with this is that it can be difficult to prove this connection that your report was the reason for a rent increase.
- There’s an active contract: A property manager can’t increase rent prices for a period in which there’s already an active contract. For example, if your contract doesn’t expire for six months, they cannot increase your rent until after the six months.
- You live in a rent-controlled city: Some U.S. cities have rent control laws, including cities in New Jersey, California, New York, and Washington, D.C. While the laws differ, the state does require the property manager to follow all rent control regulations.
- When the rent increase includes retroactive payment: In most cases, a property manager also cannot retroactively increase rent. This means increasing your rent and applying it to previous months for which you have paid for previously.
If you believe that a recent increase in rent was wrongful, you can take steps to protect yourself. It’s important to document all communications and payments that you make to the property manager. Such documentations may be help in proving an unfair rent increase.
What factors contribute to rent increases?
There are many factors that may contribute to a property manager increasing rent, including:
Location
Location is one of the most important factors that contribute to the average rate of rental increases. Rent prices are often dictated based on supply and demand. If there’s a large number of renters seeking housing, property managers are likely to charge more. If more renters decide to purchase, decreasing the demand, then property managers are likely to charge less.
Location is also an important consideration in rental pricing regulations. Some states and municipalities set limits on how much a property manager can charge renters.
Economic conditions
Current economic conditions not only influence the supply and demand of rental properties but also macroeconomic factors, like interest rates. Lower interest rates lead to an increase in home sales, reducing the demand for rentals. Even factors like unemployment rates and poverty levels can have an influence on rental rates.
Household renovations and value
The value of a rent amount correlates with the value of the property and its current amenities. For example, larger homes with a pool or nearby schools are likely to cost more than smaller homes in rural locations. If available amenities change, such as the development of a nearby shopping area, the property manager may decide to increase the rent.
Cost of living estimates
The current cost of living estimates can also lead to an increase in rent prices. As the cost of goods and services increases, property managers may increase the cost of rent to offset them. Additionally, inflation increases income, which may lead to a property manager calculating a higher property value.
When can a landlord increase rent?
It’s also important to consider the timing of an increase in rent and whether or not it’s legal. Property managers are legally required to honor your contract. This means that they can’t increase your rent in the middle of your contract.
However, once the contract has expired, they can increase the cost of rent. Most property managers will notify you of their intent to increase the rent within a month or two of the contract renewal. This gives you the option to agree to the increase or decline and find alternative housing.
How often can my landlord increase my rent?
The frequency at which your property manager increases your rent depends on your contract agreement and length. Because a property manager has to honor your rental agreement, they can only increase the rent when creating a new agreement. If your current rental agreement is for six months, and you re-sign for another six months, they could potentially increase your rent two times that year. If you sign into a one-year contract, then they legally cannot raise your fees until the following year.
The biggest challenge is with month-to-month leases. Because a month-to-month agreement creates a new agreement each month, it is possible for the property manager to raise the price of rent at the end of each month.
How much notice does a property manager need to give when increasing rent?
The number of days’ notice that a landlord or property manager must provide a renter with varies between states. In most states, the property manager must give the renter a minimum of 30 days’ notice that they intend to increase the cost of the rent. However, some states may have even longer notice periods, and the amount of time a property manager has may vary based on how much they plan on increasing the rent.
While landlords can increase rent, there are certain rules they have to follow when doing so. If you’re no longer comfortable with the new price, you may decide to find a rental that better fits your budget.
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