A residential landlord generally has the right to increase a tenant’s rent without limitation in a jurisdiction that does not have rent control. A landlord must terminate any existing lease agreement and create a new lease agreement in order to increase the rent. This is done by giving proper notice to the tenant that the current lease is to be terminated and a new lease agreement is to be offered to the tenant at a higher rent. Generally, the notice must be in writing.
Of course, the landlord must respect any existing lease agreement. The amount of the rent increase would be determined by market conditions. Or, if the landlord would like the existing tenant to remain on the property, they might wish to discuss any increase with the tenant.
As for the tenant whose landlord increases the rent, assuming the rent increase is allowed by law, when a tenant receives a valid notice of a rent increase, the tenant must either agree to the increase or make arrangements to end the tenancy and leave the premises. If the tenant does not agree to a new tenancy with an increased rent but does not leave the premises, the tenant is subject to eviction.
The only states in the U.S. that have statewide rent control are California and Oregon. A few states today allow cities and counties to enact rent control laws. They are New York, New Jersey, Maryland and Washington, D.C. As for large cities, rent-controlled residential units can be found in New York City, Los Angeles, San Francisco, and Oakland. Newark and several other cities in New Jersey have rent control ordinances. In fact, New Jersey is reportedly the state with the most cities that have rent controlled residential units.
The majority of the remaining states prohibit rent control completely. Montana, Wyoming and Alabama have no laws on the subject of rent control.
Even if a state does not have rent control, the state has landlord-tenant laws that govern residential tenancies. So, both landlords and tenants would want to refer to the law in their state to learn when in a tenancy rent increases are possible and the kind of notice that the landlord must give the tenant.
How Much Notice of a Rent Increase Does a Landlord Need to Give a Residential Tenant?
The period of notice that is required depends on the lease agreement that the landlord and tenant have and the law of the state in which the tenancy is located. Usually, the law in most states provides as follows:
- Tenancy for a Term: If the tenant has a tenancy for a term per the lease, for example a one-year lease, then the terms of the lease agreement determine the rent and when the rent can be increased. Both the landlord and the tenant must respect the terms of the lease, of course. The landlord must wait until the end of the fixed, one-year lease period before raising the rent, if that is what the lease requires;
- Periodic Tenancy: If the landlord and tenant have a periodic tenancy, for example a month-to-month lease, then the landlord must give the notice required by the lease before increasing the rent.
- Month-to-month: Most jurisdictions require that a landlord give the tenant 30 days notice before the landlord can raise rent;
- Week-to-week: Most jurisdictions require that the landlord give one week, or 7 days, notice to the tenant before the landlord can raise rent.
According to the Maryland Landlord Tenant Act, a landlord may raise the rent by any amount, unless there is a local city or county rent control law. In Maryland, cities and counties are allowed to enact local rent control laws.
In Maryland, a landlord should inform the tenant of a rent increase at least 30 days in advance if the tenant has a month-to-month tenancy. The tenant then has the option of paying the increased rent or vacating the tenancy. For a fixed-term tenancy, e.g. a one-year tenancy, the landlord may not raise the rent until the tenancy expires.
In New Jersey, as in Maryland, a landlord may not increase the rent during a fixed-term lease. So, for example, a one-year lease means that the rent will remain fixed for one year. The rent can be increased when the lease term ends. Or, if the lease is a month-to-month lease, the rent may be increased with one-month’s notice, because technically, the lease ends and is renewed every month.
New Jersey requires landlords to provide tenants with a specific form of notice of rent increases. Specifically, landlords must provide tenants with a “Notice to Quit and Demand for Possession and Notice of Rent Increase.” This notice meets the state’s legal requirement for ending the existing tenancy and allows the tenant to enter a new tenancy with the rent increase. For the increase to be legal per New Jersey law, the notice must be in writing and divided into two parts. The first part ends the old lease and the second establishes a new lease with an increased rent.
New Jersey law also addresses the issue of the security deposit. It can be increased at the same time the rent is increased, but it cannot exceed 1.5 times the monthly rent.
California has a statewide rent control law. It is known as the “Tenant Protection Act of 2019.” Landlords are allowed annual rent increases of 5% plus the percentage change in the Consumer Price Index per year, up to a maximum of 10%.
There are exemptions to the Tenant Protection Act of 2019 and some of them are as follows:
- Single-family homes and condominiums if they are not owned by a corporation, a real estate investment trust, or an LLC of which one member is a corporation;
- Any duplex where the owner lives in the attached unit;
- Mobile homes;
- School and college dormitories;
- Commercial properties such as retail stores, office buildings and the like;
- All buildings built within the past 15 years;
- Rental properties leased by non-profit organizations;
- Rental properties that are covered by existing local rent control ordinances.
If a rental property comes within any of these exemptions, the landlord must give their tenants a notice of exemption from AB 1482. Of course, landlords with properties that are not subject to rent control laws can increase their rents as much as they wish.
Can a Landlord Increase a Tenant’s Rent in a Rent-Controlled Jurisdiction?
The answer to this question is that sometimes and under certain conditions, a landlord can increase a tenant’s rent even if the residential property is in a rent-controlled jurisdiction. If a tenant resides in a jurisdiction that has rent control, then the tenant’s rent can only be increased in accordance with the rent control regulations issued by the rent control agency.
The most common reasons for rent increases in rent-controlled jurisdictions are:
- Annual Guidelines: Usually, a local rent control agency issues an annual report which contains a rent increase guideline. The rent increase guideline identifies the maximum amount by which a landlord can raise the rent of an existing tenant without approval from the rent control board. It is usually expressed as a percentage of the existing rent. The landlord must also give the tenant proper notice of the rent increase, usually 30 to 90 days, depending on the jurisdiction and the term of the tenancy;
- Capital Improvements: When an owner makes an improvement to a building subject to rent regulation, the owner may be allowed to increase the rent based on the actual cost of the improvement. To be eligible for a rent increase:
- The capital improvement must be a new improvement and not just a repair to old housing stock;
- The owner must submit a capital improvement rent increase application to the rent control agency;
- The landlord may not effect a rent increase or accept increased rent until the rent control board issues an order approving the rent increase;
- Owner Hardship: An owner may be entitled to a rent increase if the owner is not making a fair return on their investment in the property with the maximum increase permitted by the rent control regulations. To be eligible for a rent increase that is greater than that allowed by guidelines:
- The owner would have to submit an owner hardship application with the rent control board;
Again, the landlord may not effect a rent increase or accept increased rent unless and until the rent control board issues an order approving the rent increase.
Should I Consult a Lawyer about a Residential Rent Increase?
Landlord tenant law can be complex. It varies by city, county and state. A landlord-tenant lawyer can advise you of the exact rules your city has regarding rent increases and can protect your rights, whether you are an owner trying to increase a tenant’s rent or a tenant challenging an attempted rent increase.