A new landlord taking over a rental property may want to raise rents on existing tenants. While landlords generally have the right to increase rent, there are rules and regulations they must follow.
In this article, we will explore the ins and outs of whether a new landlord can raise rent, and if so, how to go about it properly.
Can a new landlord raise rent?
Yes, a new landlord can raise rent after an existing tenant's lease term ends. However, they must follow the proper notice procedures laid out by state law. Most states require landlords to give tenants at least 30 days notice before any rent increase goes into effect. The new landlord cannot simply raise prices immediately upon acquiring the property - they must wait until the existing lease expires and renewals are negotiated.
Related: How Much Can A Landlord Increase Rent
How much notice does a landlord have to provide?
The amount of notice required when increasing rent varies by state, but landlords generally must give tenants 30-90 days advance written notice informing them of a rent increase. This notice period allows tenants adequate time to plan their budget for the increased cost or to find a new rental if needed.
States like California require 60 days notice, while others like Georgia only require 30 days. Landlords should research their state's specific notice requirements.
Can a landlord raise rent during a lease term?
In almost all cases, landlords are not allowed to increase rent during a fixed lease term without the tenant's consent. Lease agreements outline an agreed upon rental amount for the duration of the contract, usually 6-12 months. A mid-lease rent hike would constitute a breach of contract.
Landlords must wait until the existing lease expires and is up for renewal to potentially charge a higher rent. Tenants are protected from unpredictable rent fluctuations during their lease cycle.
How much can rent be increased?
While landlords have flexibility to set market-based rent upon lease renewals, most states place limitations on how much the annual increase can be. Common caps range from 5-10% per year. Landlords also cannot arbitrarily raise prices far above area averages.
Researching comparable "fair market rent" in the neighborhood helps determine a reasonable updated rate. Some regulated areas may only allow increases tied to a cost-of-living index number each year.
How can a tenant negotiate a rent increase?
Tenants facing a rent hike have some leverage to negotiate. They can research average rents paid by quality tenants in the area to understand if the price is fair. Tenants can also appeal to a landlord's interests by committing to a longer lease term or taking better care of the unit.
It's worth a conversation if the tenant has always paid on time and been a model resident. Landlords don't want to lose reliable tenants and may be open to a smaller increase.
Can a landlord be charged with discrimination for a rent increase?
Landlords need to be careful rent increases are not seen as unlawful discrimination. Federal and state laws prohibit raising rents or denying renewals based on personal attributes of tenants like their race, religion, family status or disability. Landlords must have consistent, non-biased reasons documented for any price changes like general market factors or increased expenses.
They could face legal trouble if rent hikes appear targeted at residents of a protected class without cause.
Are there alternatives to raising rent?
While a rent boost may seem the easiest way to raise revenue, landlords have other options to consider first. Additional services like a gym, clubhouse or covered parking could attract willing tenants to pay extra in rent. Late fees, pet rents or short-term rental platforms also generate income without denying renewals over cost.
Landlords aiming for the long haul may find keeping quality tenants through gradual small increases and amenities a better financial choice than aggressive hikes causing turnover.
Conclusion
In conclusion, a new landlord purchasing a rental property does have the right to increase rents upon lease renewals. However, they must adhere to state and local rules regarding proper notice periods, caps on annual rate hikes and avoiding discrimination. Landlords would be wise to consider all factors impacting their costs and communicate respectfully with tenants regarding any changes. Alternatives to rent increases should also be explored initially where possible to preserve good tenant relations for the long term.
