Property Management, Tenant Selection, Real Estate News & Tips

Oregon Votes to Prevent Sudden Rent Increases

By on March 1, 2016 in News with 26 Comments

Rent Increase Law

Update: Oregon Gov. Kate Brown signed House Bill 4143 on March 15, 2016.  According to terms, the new laws regarding rent increase notifications will go into effect 30 days after it is signed.

A new bill proposal in Oregon will extend the timeline requirements for landlords when issuing notices for rent increases to tenants.  

House Bill 4143 passed in the Oregon House of Representatives on February 23, 2016 with wide support in a 48-11 vote.  The goal of the bill aims to address the state’s housing affordability issues by increasing tenant protections.

Current Rental Market Trends

The Oregonian reported on Oregon’s housing crisis in October 2015, citing a whopping 14-percent annualized rent growth-rate for 2014 for Portland, the state’s biggest city.  Rising rents are in part to due to an increase in demand as the Oregon rental housing vacancy rates dipped to 3.6 percent, lower than any other U.S. state in 2014.  

Luke Hammill of The Oregonian notes that, “[these] numbers likely won’t surprise anybody who has paid attention to Portland’s and Oregon’s rental market in past months. Low vacancies are one part of an equation that also includes skyrocketing rents, population growth, sales of apartment complexes, short-term rentals and a boom in new apartment buildings in an effort to release the pent-up demand.” (December 10, 2015)

Current Legislation for Rent Increases

Under current Oregon law, landlords and property managers may introduce a rent increase for month-to-month leases 30-days prior to the effective date.  Rent increases are prohibited throughout the duration of longer-term leases (6-month or one year).  

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.    

Current Tenant Protections from Rent Increases

As long as a landlord follows proper protocol in regards to the 30-days notice and how to inform tenants of a rent increase in writing, there is  little a tenant can do to protect themselves from a rent increase.  Rent increases are illegal if they are found to be discriminatory or as an act of retaliation to the tenant.

Proposed Tenant Protections for Oregon

House Bill 4143 would prevent landlords from increasing rent on a month-to-month tenant prior to one year.  After one year, a landlord would be required to give a written notice 90-days notice prior to the date of effectiveness.  The bill would also require 90-day notices on tenancy terminations, up from the current 30-day requirement.

Benefits of Extended Rent Increase Timeline

This proposed rent increase legislation will primarily benefit tenants who find themselves facing uncertain housing stability as the rental market tightens.  Under the current 30-day notice requirement, renters are being priced out or otherwise displaced from their neighborhood, which could lead to higher rates of gentrification.

An extended notice period, like the proposed 90-days, would provide renters with the opportunity to make an informed decision about the affordability of an increased rental payment, or give them adequate time to find and secure a new rental unit if they decide to move.  90-days is a more reasonable timeframe for renters to budget for a higher rental payment or save money to afford to move.  

For landlords, the benefits are fewer but this proposal could provide the opportunity to strengthen landlord-tenant relationships across the rental market.  By giving your tenants a bigger window to prepare for rent increases, they won’t experience as much shock when they receive that written rent increase notice.  Having adequate time to process the change and create a new budget could mean less turnover and longer vacancies for landlords.

Pro Tip: As mentioned above, a landlord will inevitably need to increase his rental rates in order to keep up with market trends and inflation.  A great policy is to include regular, small rent increases at the beginning of every new lease term.  This helps you avoid any backlash or shock from current tenants, while keeping up with market trends.  Additionally, you would stay in compliance with this newly proposed legislation.

See the example below and get more tips on How to Raise the Rent on Your Tenants.

From How to Raise the Rent on Your Tenants

A good practice a landlord may follow, is building regular rent increases into the lease agreements.  By raising rent by a small percentage each year, you will be able to consistently follow raising market trends, without burdening your tenants with a huge increase.

Perhaps you feel comfortable with your current rent prices but what about 5 years from now?  Say in 5 years, you re-evaluate your asking rent and discover you could easily ask $100 more per month on your property to match market trends.

Imagine the difference on your tenants if you simply raise the monthly rent by $20 every year for five years, instead of them paying the same flat rate for 5 years, only to receive a notice that you are suddenly increasing the rent by $100!?

In that first year, you will be generating only $240 more annually on that unit.  But by year two you will collect $480 extra.  And by year five, at $100 more a month, your income will grow by $1200 annually from that one property.  Given regular occupancy, over 5 years you will have earned an additional $3600* from that one property, and by slowly increasing your asking rent by only $20 a year you limit the negative impact on your tenants.

*(Y1:$240 + Y2:$480 + Y3:$720 + Y4:$960 + Y5:$1200) = $3600

 

Update: Oregon Gov. Kate Brown signed House Bill 4143 on March 15, 2016.  According to terms, the new laws regarding rent increase notifications will go into effect 30 days after it is signed.  

HB 4143: SECTION 6. Section 2 of this 2016 Act and the amendments to ORS 90.220 by section 3
of this 2016 Act apply to increases in rent occurring on or after the 30th day after the effective
date of this 2016 Act.  For more details you are invited to review House Bill 4143

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About the Author

About the Author: Kaycee manages marketing and media relations for Rentec Direct, bringing a unique perspective to the world of property management and proudly shares industry news, products, and trends within the community. .

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There Are 26 Brilliant Comments

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  1. aditarani says:

    your post is very informatic, it is very useful for me thanking you..

  2. EMILY JENSEN says:

    I just got a notice saying my rent will go up from 935 dollars to 1280! Is this legal?

    • Kaycee says:

      Hi Emily,

      Yikes, rent increases are never fun but unfortunately a landlord is usually allowed to charge however much rent he would like, and as long as he gives you proper notice and you aren’t living in a rent controlled property, it is typically legal to do so.

      However, landlords cannot raise the rent if you are in the middle of a lease. He can only do it before you renew your lease or if you are on a month-to-month lease.

      For a rent increase like yours, most states require a landlord give you 60 days notice in writing. Oregon just increased this timeline to 90 days if you have lived in your unit for more than a year.

      For your specific situation if you still feel like your landlord is breaking housing laws in your area, I suggest contacting your local Housing Authority (just google Housing Authority for you city and state) or speaking with an attorney familiar with local landlord-tenant laws.

      Wishing you the best in your housing situation. Good luck!

      • phyllis lapainis says:

        What if you haved lived in a complex for 5 years, my rent just increased from $1,198.00 to $1,279.00 with a thirty day notice, that is a 10% increase. i am 70 years old, and receive a social security check of $1800.
        I have fallen 3 times during the course of my tenancy, without receiving anything other than, oh thats a shame.

        is there any help for out there?

        • Hi Phyllis,

          Are you on a month-to-month lease agreement in Oregon? If so your landlord will need to provide you with a 90-day notice before increasing the rent. If you are on a fixed-term lease that is about to expire, and your landlord is asking you to renew your lease at the higher rate, 30-days notice is most likely legally acceptable.

          If your landlord hasn’t raised the rent in 5 years, then a 10% increase is actually on the low end – especially with rental rates skyrocketing all over the country. If the new rent is out of your price range, it might be time to downsize to a more affordable home.

          Rent increases are stressful, especially on a fixed income. I would contact your local housing authority for further guidance for your particular case. As far as falls on the property, if it’s due to property damage or other safety reasons, you will absolutely need a lawyers help.

          Wishing you the best in your housing experience.

        • phyllis lapainis says:

          They have increased the rent every year, I know they have given people concessions this year, because as you are aware, people talk. When I made the request I was told no

  3. Donna says:

    I am wondering if the law applied to Salem, Or as well as Portland on 90-day notice? Also- this 4-plex has water sewer garbage paid. Our 1 yr lease of 750.00 is up 7/1/16 Our owner states if we would like to continue on a month to month we will need to pay 23.00 utility fee for increase in his water/sewer and garbage bills. Tenants will also assume the fee of 20.00 if the green yard debris can is left out when it is empty. The lawn maint man is who takes this out and he should be the one responsible. There are 4 apts and 3 cans so who is taking out the cans? The owner lives 3 hours from here. He says the utility fee is not part of the rent so how can you decide how much water, trash and outside lighting 1 tenant will be responsible for. We are currently applying to purchase a home and a 90 day notice would give us more time to finish with loan apps and funding but I am not sure if the new Oregon Law applies to the entire state. Thank you for any help! Donna

    • Kaycee says:

      Hi Donna,

      From my understanding, the rule applies to the entire state of Oregon. So if you have lived in your unit for a year, your landlord would still need to give you a 90 days notice before raising the rent.

      Regarding the addition of utility fees to your monthly rent payments. This is actually a fairly normal practice for a lot of landlords. He may have a meter that determines the water use and energy use of each unit. Or more likely, he has averaged the monthly bills from the previous years to determine an average monthly bill and split it 4 ways to find a monthly fee amount for each unit. If it were me, I would be excited to have a fixed amount for a water bill so I could budget my housing expenses more reliably.

      Regarding the green yard debris. Your landlord might be getting a bill from the city for any left out cans, so he is could just be passing on the bill to his tenants. Is your maintenance man on site everyday? If so, it would make sense for him to bring the cans back in. Alternatively, if he only shows up once a week, then it makes sense that the tenants should bring them back in. Depending on how friendly you are with your neighbors, you could set up a system so a different person is responsible for bringing in all the cans each week. Or you could just start a trend, for whoever sees the empty cans first should just bring them in to be neighborly. Or you could just label the cans and have one assigned to each unit.

      Good luck with the home purchase, that is very exciting! Let me know how it all works out with your current living situation.

      • donna says:

        Hi Kacee-
        He states that because I was in a lease going month- to- month he doesn’t have to give me 90 just because I was I was in a yr lease. That is only if I was month- to month. The unit was water/sewer/garbage paid so if he wants to charge 23 dollars ok I will do that. I am still home searching as he is just too hard to rent from for many reason… letting us go 3 days with sewer in our bathtub so unable to use any water as it filled up the tub more and he said he had 5 days to fix it…We are done for a new home to purchase and will be done with him

  4. Jeremy says:

    Hi Kaycee, thanks a ton for your post!

    My 1-year lease is up in July, and I just received a notice saying that if I wished to remain in the property on a month-to-month lease, then my rent will be increasing by a certain amount.

    Are they able to raise the rent on short notice because my lease is over or do they have to give me 90 days notice under the new 4143 laws?

    Any advice is appreciated!

    • Kaycee says:

      Hi Jeremy,

      Unfortunately this new law is creating a lot of confusion even among housing professionals about this exact issues. According to the Oregon Rental Housing Authority, they recommend that the 90-days notice applies only after you have entered into a month-to-month tenancy agreement. So in your case, since your lease is about to expire, it looks like your landlord may be in the clear for raising the rent at the end of the lease, even with short notice. However, since the laws are so new and unprecedented, the Oregon Rental Housing Authority also recommends that landlords error on the side of caution and provide 90-days when issuing any sort of rent increase after the first year.
      Here’s more info: http://www.oregonrentalhousing.com/news/3914735

      If you need more time to make a decision about remaining at your current place, I suggest an open conversation with your landlord. You could point to the new 4143 law and explain that you though would have a 90-day notice to budget for increased rent and see how your landlord interprets the new law. Alternatively, you may find it better to contact the Oregon Rental Housing Authority directly for further guidance.

      Good luck with everything. Let me know how it all works out!

      • Jeremy says:

        Thanks again for your comments!

        It looks like I definitely do fall in a grey area per your link:

        “What is not so clear is what happens when by its terms, a lease expires and converts to a month-to-month tenancy. After much discussion and attorney consultation, the Oregon Rental Housing Association, recommends that the most conservative and safest interpretation is to count the first year of tenancy as starting on the day the property transitions to a month-to-month tenancy. After that clock begins, you may lawfully serve a 90-day notice of rent increase so long as it will not be effective prior to the end of the first year of the tenancy (from the day it converted to a MTM).”

        Based on my research of the actual bill text, I think I should be in the power position in case this goes to court. (Which I may pursue since I’m looking at a ~40% rent increase; too bad they didn’t leave those triple damages provisions in there!)

        If I have a fixed term lease, then this applies – “(2) The terms of a fixed term tenancy, including the amount of rent, may not be unilaterally
        amended by the landlord or tenant.”

        If I have a month-to-month lease, then this applies – “(2) If a tenancy is a month-to-month tenancy, the landlord may not increase the rent:
        (a) During the first year after the tenancy begins.
        (b) At any time after the first year of the tenancy without giving the tenant written
        notice at least 90 days prior to the effective date of the rent increase.”

        It’s either one or the other – either way, I’m golden!

        Thanks a ton for your input!! I’ll try to remember to post here when it’s resolved!

  5. Brian says:

    Hi Kaycee. I’ve read some of your answers here in regards to a mandatory 90-day notice of rent increase from a landlord to tenants for MTM and after a 1-year lease has expired. How about an expiring 2-year lease on a newer single-family house that has been grossly under-rented in a highly desirable area, as compared to other similar homes in the vicinity? I’ve read House Bill 4143, and it does not refer to anything past 1-year leases? My question: Does a landlord still need to give written notice on an expiring 2-year lease, that rent will increase 90-days after the expiration date, and nothing less than 90-days? Thank you very much for your advice!

    • Jeremy says:

      The month-to-month tenancy begins after the expiration of the fixed term (in your case 2 years) lease. Rent may not be raised during the first year of a month-to-month tenancy. In your case, that means that rent may not be raised until three years after the original move-in date.

      I’ve talked to a lawyer since my original post (see above) and this is defensible in court.

      • Thanks Jeremy. It was smart to get the advice from a lawyer, that is a huge help to the other commentors and to my understanding of the new law.

        Brian – Hopefully Jeremy’s response helped shed some light on your situation. Good luck!

  6. Nick says:

    I moved into my current apartment at then end of December, 2015, and the apartment was recently sold to a new owner. Our new landlord has given us 90 notice of a rent increase (up from $1200 to $1800 – YIKES), is this legal since we moved in last year? Our rent is month to month, and it’s very stressful looking around and seeing such high prices for mediocre to bad living spaces.

    • Hi Nick, if you live in Oregon, the new 90-day notice law applies starting in April 2016. Along with the new law, landlords are not allowed to raise the rent during the first year of a month-to-month lease agreement. The problem with your situation is that your lease started before the new law took effect. The way I interpret the new rent increase law, would be that your landlord would not be able to raise the rent until your month-to-month lease reaches 1 year on Dec. 2016. However, he is justified in giving you 90-days now, so that once you hit one year, the rent will go up in Dec. 2016. I am not a lawyer though, so I would highly suggest talking to a landlord-tenant attorney and your local housing authority. Also, if you cannot afford the upcoming rent increase, start saving now, 90-days is a good head to start budgeting and saving for a move or increased housing costs. Good luck! Let me know how it ends up working out.

  7. Julie says:

    My Friend in Oregon just got a letter today saying that in 90 days her rent will go from
    $1035.00 to $1895.00 a month.
    Is that LEGAL to go up that much?
    She’s been there 5 years.
    Mahalo
    Julie in Hawaii

    • Oh my gosh! That is such a big jump. I am sorry that your friend got that notice and has to deal with that kind of stressful situation. Unfortunately, it is legal to raise the rent by that much as long as proper notice is given. The fact that your friend has lived in the property for 5 years without a rent increase is lucky, the landlord should have been increasing the rent a little bit every year so that by they time he hit 5 years he could match market rate without such a dramatic increase for the renter. I would advise that your friend talk to her landlord and see if he is willing to negotiate at all- remind to her to be nice and reasonable in her discussion with him. Also look at the rentals in the area she is living, she might notice similar pricing and it will make since for her to stay put and start paying the increased rate. Tell your friend all the best with her rental situation. Here are some more tips for your friend: https://www.rentecdirect.com/blog/2016/08/landlord-raises-the-rent/

  8. Jennifer says:

    July 22nd my landlord gave me a 60 day notice to vacate. I have lived here almost 7 years. My friends are telling me there is a new law in oregon that he has to give me 90 days but I dont see this and cant find any info about it anywhere. Any info you have or links to such a law would be greatly appreciated..I live in Medford, Oregon and it is a no cause eviction.

    Jennifer

  9. Hi Jennifer,

    I’m sorry to hear about your situation, unexpected changing to housing are always stressful to deal with. I am happy to provide you with my interpretation of the law but it is important to understand that I am not a lawyer and cannot provide legal advice – you should definitely speak with an attorney for further guidance.

    According to my research, it looks like your friends are right. As published by the Oregonian, House Bill 4143 (signed in March 2016) , which bans rent increases in the first year of a month-to-month tenancy. It also requires 90-day notice for increases after one year.

    Here is the link- http://www.oregonlive.com/politics/index.ssf/2016/03/kate_brown_signs_bills_on_affo.html

    Good luck! And let us know how everything works out.

  10. Stephen Cramer says:

    Hi Kaycee & Hello all*,

    The property was sold and the new owner/landlord took possession yesterday Sept 25. Today Sept 26, 2016 the new owner came around with clipboard in hand and handing out rent increase notices. My rent will be going up 37.3% in 90 days. Since we’re new tenants for this new owner does HB4142 protect us for the stated one (1) year wait for rent increase? Thanks for any and all help. (This increase will force a move).

    *Note: posted this note in a different location and hope this isn’t confusing (I know I am). People in charge feel free to remove one or the other but I sure need some help and comments…thank you.

    • Hi Stephen,

      If it is a month-to-month rental agreement, the new owner should be issuing a new rental agreement along with the rent increase. In this case, he would be perfectly in his rights to raise the rent. And the “one year” would start now.

      If the new owner is merely keeping you under the current rental agreement (that I assume is also month-to-month) he could still raise the rent if you have lived there over a year. If you have not lived at this property over a year, you might be able to argue that he is not allowed to raise the rent till you hit the one year mark.

      The only other way a new owner could not raise the rent is if you are under a fixed-term lease contract (ie one year lease) that has not expired.

      If you do choose to fight the rent increase, I strongly advise you speak with an attorney because I can not provide legal advice.

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