How Big Can A Rent Increase Be Before Its Illegal

Dated: 05/14/2015

Views: 351

It was recently reported that a San Francisco woman's rent was increased 4 times the current rate.  I know some are thinking, "only in California." 


Except it's not. 


In this woman's case, zoning changes were to blame for freeing the landlord from rent control laws and allowing him to jack up the rent.  Rent increases are affecting people across the country. 

The average U.S. rent has climbed 14 percent to $1,124 since 2010, according to the commercial property tracker Reis Inc.  That’s four percentage points faster than inflation and more than double the rise in U.S. home prices over the same period.  

In 2014, rents nationwide increased an average of 3.6%, and nearly 11% over the past three years, according to Freddie Mac. Now, even with a surge in apartment construction, rents are projected to rise an additional 3.3 percent this year, to an average of $1,161, according to Reis. While that’s slower than last year’s 3.6 percent increase, the upward trend isn’t going away.

23% of Texans renters have costs of housing and utilities which is at least half of their household income.  The government defines housing costs in excess of 30 percent of income as burdensome.

I recently helped a family member who had to find a new place because the owners decided to sell.  Trying to find a similar sized rental property at the price they got just a few years ago, just does not exist in this market any more.  Rentals stay on the market an average of 36 days, the really good ones gone in 1-4 days.  The average lease price for a 3 bedroom 2 bath house is about $2000.  


Landlords can raise your rent as much as they want.


There are no cities in Texas that have rent controlled or rent-stabilized areas.   You see a lot more of them in New York and California.   Non-rent-controlled areas make up most of the nation’s rental market. Rentals here are subject to whatever the market will bear.  Landlords are often perfectly within their rights to raise your rent.

Unless you lock yourself into a longer lease or buy a home, the fact is there’s little you can do to control your costs as a renter.

With that knowledge in mind, it may be time to look at your budget and see if you could afford to buy. If buying really is not an option right now, don't fear that landlords can just do what they want any time they want.  


What are the rules landlords have to follow?


Landlords do have limitations on how and when they can raise the rent.  It's all in the lease and you both have to stick to the terms.  A landlord can only raise the rent when your lease expires and with the appropriate amount of notice.  If you’re month-to-month, the landlord could conceivably increase your rent at the end of any month. Ultimately, there is no cap on the amount a landlord can increase your rent.

If a lease is in effect, you’ll want to make sure any rental increases don’t violate the terms of the lease. The longer your lease, the longer a landlord has to wait to implement a rent increase.  But if you just think the increase feels like too much, you probably don’t have much legal basis for a claim, experts say.

Maybe this time next year, you can say hello to homeownership and goodbye to your landlord—for good.

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