Are You Legally Compliant for Raising Rent?


by Jeff Pepperney, Real Property Management

P rofitable single-family rental properties depend on regular rent increases. As the market, property values, and demand changes, so too should your rental rate. But like most business decisions, there are both good and bad ways to raise the rent on a rental home. What is more, your strategy to raise the rent on your properties may even violate local laws. This is what makes knowing the laws that govern rent raises so important. By knowing and following the local landlord laws for each of your rental properties, you can keep yourself out of court and your properties legally compliant. As an investor, you need to be prepared for long-term success with a detailed strategy for rent increases. This strategy starts with the lease. Smart rental property owners know the importance of including language about rent increases in the lease. By making sure your tenants and your lease documents are all aware of the possibility of future rent increases, you can better manage expectations and avoid legal challenges. But raising the rent isn’t just about your lease. In most cases, local law will prevail in the event of a dispute. That is why ensuring your lease and your rent increase strategy are in line with local rental law. Often, local laws will differ in three key ways: ● How much notice is required. In most states, advance notice (often 30 days) is required before a property owner can enact a rent increase. These periods vary from place to place, and so you will need to know the law for each one of your rental properties. ● How the notice must be delivered. Many states also have rules about the format of the notice and how it must be delivered. For example, while in some places simply telling your tenant is considered

sufficient notice, while in others you may need to send your tenant a certified letter. ● Rent control laws. In some areas, rent control laws have gone into effect. These laws typically regulate how much you can increase your rent and how often. It is also often the case that rent control laws apply differently even to properties in the same area depending on the property’s location, size, age, and so on. For all of these reasons, the best way to keep your rental homes legally compliant to research the local laws that apply to each of your properties. If you have invested in different locations or even different states, it is important to be aware that each property is likely to be subject to different sets of local regulations. For example, it is entirely possible that one property could be exempt from newly passed regulations, while another property nearby is not. While local law is not the only consideration when planning to raise the rent on a rental property, you don’t want to lose the rental income that you otherwise could have collected due to misreading how those laws apply to each of your properties. It’s no secret that determining the appropriate rent amount for each rental property, including the right amount and timing of rent increases, can be a challenge. Raising the rent involves a number of factors, starting with staying in compliance with all local laws. Doing otherwise could not only result in unhappy tenants, but also a lawsuit. At Real Property Management, each of our local offices provides free rental property analyses. We work with rental property investors to help you set the most accurate rent rate for each of your properties, as well as guide you through the legal aspects you need to know to stay compliant with local law. •

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