How Much Are Landlords Allowed To Raise Rent?
Written by
Heather Taylor
Edited by
Molly Sullivan
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2022 has been an unusual year for rent. Some states, like California, have been widely publicized in the news for rent increases of 10% or higher. While not all states have experienced high rent increases, the unspoken question looming on the minds of tenants everywhere is about rent’s threshold.
Exactly how high can a landlord, or property management company, raise the rent of their tenants? Here’s what tenants need to know about rent increases, from state to state, and if tenants are afforded any kind of protection.
Why Rent’s Sticker Shock Is Especially Painful in 2022
Many may recall rent in the early days of the COVID-19 pandemic in 2020. Rent experienced drastic drops due to residents moving out of many expensive metropolitan areas. Since then, rent is officially back on the rebound, and Marie Bromberg, licensed real estate salesperson with Compass in New York City, said the increases are shocking because we compare it to rents in 2020 or even early 2021.
The perspective of tenants aside, what is not often spoken about is what happened to landlords. Bromberg, who had several landlord clients at the height of the pandemic, said many landlords cut to the bone. They were losing money on rent and needed tenants, any tenants, to prevent them from losing more money.
“Now the market has recovered in a big way, the landlords are trying to recoup the lost year(s),” Bromberg said. “But if you compare the rent to what they were getting pre-pandemic, in many cases the increases are not as drastic as one would think upon seeing the numbers.”
How Much More Can Rent Increase?
The answer to this question is honest if a bit bleak. Bromberg said it depends on what is on your lease.
If tenants have a tenuous relationship with their landlord, or a non-existent relationship, the landlord is only obligated to the terms of the lease. Rent increases are ultimately up to the landlord’s discretion if a tenant does not have a required notification clause for renewal or a cap on how much they can increase the rent.
In the case a landlord uses a broker to rent out their property, they benefit from having an industry standard lease. This lease generally incorporates obligations around tenancy and leases. However, and unfortunately, Bromberg said many tenants forgo a tenant broker. Some may not know what to look for in a lease or worse, don’t read their lease.
There is a silver lining for tenants on great terms with their landlord. Rent, and any increases, tends not to be a significant problem for tenants and landlords with a good, solid relationship.
“Usually, the landlord will give the tenant a heads up the increase is coming, and the two of them can work it out,” Bromberg said.
What About Rent Control?
While most landlords in various parts of the country can raise rent and raise it by as much as they want subject to the terms of their lease agreements, rent control is readily present in many states.
Scott Trench, CEO of BiggerPockets, said a majority of states have laws that preempt rent control and prohibit any cities within those states from passing rent control policies. Some states, like California and Oregon, have statewide rent control. Other states, Trench said, leave it up to each local municipality to determine if there will be rent control or not.
Should there be a significant increase in rent, Trench recommends professional landlords and property managers let tenants know as early as possible about their intentions. Legally, Trench said many local rules and lease clauses require landlords to notify tenants of lease increases 30 to 60 days before the termination of the lease. (Although this varies by location.)
“In states or municipalities where rent control laws apply, tenants can look up the laws to determine if their rent increase is compliant or not,” Trench said.
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