Chapter 7

Raising Rent and Rent Control

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The Complete Guide to Rent Collection

Raising Rent and Rent Control

As a landlord, you’re probably wondering when you should raise your rent price. On one hand, you want to bring in as much rental income as possible. On the other, you need a price that attracts tenants so you avoid a rental vacancy.

In this article, we’ll cover raising rent and rent control, as well as situations where your tenant may get a break on rent, such as a rental discount or a rental subsidy.

The Basics to Raising Rent

Landlords often have quite a few questions about when and how to raise their rent. Here are the most common questions and their answers:

When Can You Justify Increasing Your Rent Price?

There are a few instances in which raising the rent price is justifiable. Here are the main three:

  • If similar units in your location are raising their prices
  • If it’s peak rental season and demand for rentals is high
  • If you update your unit or make it more valuable (new flooring, appliances, etc.)

However, you have the option to raise rent once an existing lease ends. So even if you’re not in those three scenarios, it’s okay to increase the rent price as long as its fair.

How Often Can Landlords Raise Rent?

Landlords cannot raise rent whenever they feel like it. If your rental property is currently being leased by a tenant, you have to wait until the lease expires before you can increase rent. In most cases, this means up to twelve months before adjusting your rent price. 

The only time you can raise rent during a lease is if your tenant’s agreement is month-to-month. You’ll need to provide written notice of the change ahead of time, and provide a Rent Increase Notice to your tenants with the new rent price.

If you’re updating your rent price between tenants, then you can go ahead and advertise the new rent price on your rental listing. Keep in mind that many cities and states have specific laws regarding how much a landlord can raise the rent, so make sure you find out how your local laws will dictate your updated rent price.

What Are the Benefits and Drawbacks of Raising Rent?

The main benefit to raising rent is increased income, which can be taken as profit or reinvested into your rental business. However, there are drawbacks to raising your rent as well. For example, it may become harder to find interested tenants if your property is out of their budget. And, raising rent before renewing a lease can lead to turnover, which will affect your income.   

What is Rent Control?

Rent control is a price limit on the amount you can charge tenants for renting your property. It acts as a price ceiling, preventing rent prices from being charged above a certain level or from increasing at a rate higher than a predetermined percentage. For instance, some cities may limit the rent price to a certain dollar limit. Other cities may say you cannot increase your rent price by more than 3% each year.

The purpose of rent control is to regulate how much individuals and businesses have to spend on real estate. It is designed to make renting affordable for renters while remaining fair to owners.

If your property is in a rent-controlled city, keep in mind that not all properties in a rent-controlled city are subject to rent control. Two common exceptions are if the building is new and if the building is owner-occupied. Most rent-control ordinances include a way for rent to increase yearly or whenever a new tenant moves in.

What Impact Does Rent Control Have on the Rental Market?

Rent control creates an artificial supply or demand issue. This typically happens if tenants never want to move out because of the low rent price. When there is reduced tenant turnover, the supply of available rental properties goes down, making it hard for new tenants to find places to move into. On the flip side, when supply is artificially low, landlords tend to have a much easier time finding tenants.

Find Out About Rent Control In Your Location 

Here are three resources to consider:

  1. Your city may have a Rent Control Board.
  2. You can reach out to your state or local Apartment Owners’ Association.
  3. You can contact a local attorney who specializes in landlord-tenant laws.

What Are Rental Discounts?

Rental discounts are something you can offer your tenants as an incentive and a helpful way to encourage your tenants to pay rent on time.

These are some circumstances when a landlord could offer a rent discount:

  • If your tenant pays rent on time for a certain number of consecutive months
  • If your tenant completes maintenance or handy work on their own
  • If your tenant acts as an on-site manager to help with other units on the property
  • If you want to incentivize your tenant to sign a lease renewal

What Are Rental Subsidies?

Rental subsidies are rent payments covered by the government or a non-profit agency. Most cities have rental subsidy programs, which will allocate rent payments to tenants who need assistance. If your tenant is having financial troubles, you can refer your tenant to your city’s rental subsidy program. Doing so can help avoid late or partial rent payments, while also preventing turnover.

Avoid Rent Disputes with Avail

Regardless of your rent price, you can use Avail to avoid rent disputes. Landlords can access lawyer-reviewed lease templates to clearly communicate rent prices, and you can receive payments through the Avail platform.

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