Getting a notice from your landlord that your rent is increasing would ruin anyone’s day. Unfortunately, this stress-inducing reality has been happening across the country as reports of rental rates hitting an all-time high have been making headlines regularly.
After the initial shocks wear off (and the superlatives subside) it’s time to start thinking about your options for dealing with a rent increase. Keep reading to find out what you can do when your landlord raises the rent.
First things first, it’s important to understand why your rent is going up.
Landlords may decide to increase their rental prices in order to match market rates, to pay for property maintenance or improvements, to accommodate tax increases, or simply to increase their profits. Like most industries, the rental market responds to economic trends creating conditions for owners to ask more or less for rent depending on their region.
But why is the rent going up so much?
It turns out, that most landlords do not regularly raise their rent to match the cost of owning and maintaining a property. What ends up happening is after 5 years at a steady rental rate, the owner will realize that a rent increase is necessary to keep up with increasing property taxes, maintenance, and market rates. Suddenly, after 5 years of affordable rent, you might see a sudden 10-25% increase.
For a lot of renters, a 25% increase could price them out of their current rental property.I try to recommend that landlords include a regular 3% increase every year so they do not find themselves in a situation where they are suddenly asking their tenants to pay an extra few hundred dollars a month. A $30 increase each year is a lot easier to stomach than a $150 increase after nothing for 5 years!
So you got a 25% rent increase (or more!) – Is that even legal?
Most likely, yes it is legal.* Landlords can charge whatever rent the market allows. State laws dictate how much notice a landlord must give before raising the rent on a month-to-month agreement. If you are on a lease, good news, your landlord cannot raise the rent on you. But as soon as the lease is over, he can raise the rent, even if your lease transitions into a month-to-month agreement.
Some states, like Oregon, prevent rent increases in the first year of month-to-month tenancy and set longer periods of required notice before a rent increase takes place. A quick Google search of “[Your state] rent increase notice” should reveal how much time your landlord must give before raising the rent.
The only other reason a rent increase would be considered illegal is if you feel like your landlord is raising the rent in retaliation to your tenancy. If you think this is you, you need to contact a landlord-tenant attorney to start building a case.
*Rent increases like those described above are legal in areas that do not have rent control or rent-stabilization acts in place. According to Rachel Stults at Realtor.com, rent-controlled and rent-stabilized areas are pretty rare, are governed on the local level, and have rules around how often and how much rent can be increased.
If you are facing a rent increase here is what you should do:
Ask for Time to Think About it
You don’t need to decide today if you are staying or going. But you do need to make a plan to think about your finances. Housing expenses should account for 30% of your income (including utilities). If the new rent is going to price you out of your household budget, finding a less expensive rental is what needs to happen. Do not put additional strain on your finances by living in a place you cannot afford.
If you can afford the new rent but do not want to pay it, do some research to see what else is on the market. You might discover that rents have gone up universally in your area and your landlord is asking for a reasonable price. Would it be worth the moving expenses to find a comparable property with comparable rent?
Try to Reasonably Negotiate
Before you start paying the higher rate or perusing the rental ads, have a professional and honest conversation with your landlord. Tell your landlord you are concerned with the rising rent prices and that you will probably have to move. You might find that he likes you as a tenant and will negotiate the rent increase down in order to keep you. This tactic will only work if you get along with your landlord and have a history of on-time rent payments.
You have to be prepared for him to say no. But it won’t hurt anything to ask. Be professional, empathic, reasonable, and never get angry or defensive. I have heard the success of renters talking a 10% rent increase down to 5%, with the knowledge that the rent will increase by another 5% in a year, but at least it wasn’t such a steep jump. If you are mean or hostile during this conversation, your landlord will probably be happy that you are moving out.
Ask to Sign a Longer Fixed-Term Lease
Landlords cannot raise the rent on you during a fixed-term lease agreement. If you are tired of your landlord raising the rent every year, ask your landlord if you can sign a lease for 1 or 2 years. This means you will have to commit living on that property but if you have no intention of moving you will benefit from the knowledge that your housing budget will remain stable.
In most cases, your landlord will agree to a long lease agreement, because that means they will not have to deal with releasing the property, turnover, or vacancy. If you already have a history of on-time rent payments and good landlord-tenant relationship your landlord should be open to a long-term lease agreement.
In some cases, the only thing to do will be to move. The harsh reality of rising rents is that some people will be forced to move out of great apartments in prime locations. Moving away from your city center or job can reduce your housing expenses; however, it may also make your commuting expenses go up.
If you live in a tight rental market, with limited vacancies, be sure to communicate your moving plans to your landlord. He might be reasonable about giving you an extension to live on the property at your current rate until you find a new property. Don’t overstay your welcome or take advantage of your landlord’s generosity. Remember that your current landlord will need to give you reference in order for you to find a new place.
Prevent Rent Increases – Be a Great Tenant
I have had many discussions with landlords that they do not want to raise the rent on good tenants for fear of losing them. In general, landlords hate finding new tenants. Turnover is expensive and time-consuming. If you are a good tenant, ie pay your rent on time or early every month, there is a chance that your landlord will avoid raising the rent on you. This is not always the case, as some rent increases are inevitable but every renter should strive to be a good tenant.
Unfair Rent Increases
If you think that your rent increase is unfair or is done in retaliation to get you to move, you can contact a landlord-tenant attorney in your state to talk about your options. An attorney familiar with the laws that pertain to tenant rights in your state will be necessary to move forward with defending yourself legally.
Have you recently gotten a notice that your rent is increasing? Let us know what you did in the comments!
This post was originally published August 12, 2016, and was updated on October 1st, 2018