Discover why we are the only choice for Property Management

Property Management Blog

Everything You Need To Know About Rent Increases

PMI Golden State - Monday, August 19, 2019
Property Management Blog

Increasing rent is something every landlord considers at one time or another. It’s an important way to make sure that the amount of money you bring in keeps pace with the current market and inflation as well as any rising costs you may incur.

But there are very specific rules that surround increases in rent and it’s important that you know and understand them before you ask your tenant to pay more. 

With all of the information below, make sure that you remember that the rules vary from city to city and county to county in California. The website NOLO has a great breakdown of the rules by city or county. You can find it here

How do I tell my tenant about an increase in rent?
Under current California law, a tenant in a month-to-month lease must receive 30 days’ notice for any rent increase of 10% or less. Any rent increase greater than 10% would require 60 days’ notice. 

The California legislature is currently looking at a bill that would extend those times. AB1110 would require that any increase of 10% - 15% would require 90 days’ notice and an increase above 15% would require 120 days’ notice. 

Rent increases usually need to be provided to the tenant in a written notice. Your best bet is to send it via certified mail to guarantee that the tenant receives it. However, if you text message and receive conformation regarding the rent increase, that could work as well. The key is you need to have dated proof that your tenant has received notice of the rent increase. 

What is rent control?
In many California cities, how much and when you can increase the rent is governed by rent control. In 2019, Oregon was the first state to institute a statewide rent control law. In most states, however, the rules and regulations of rent control reside with local government.

Rent control is when the local government tells you how often you can increase rent and by what percentage you can increase it in a given year. In extreme cases, rent control means the rent cannot be increased as long as the tenant stays in the home. 

The best example of rent control is the television show Friends. If you’ve ever wondered how a waitress (Rachel) and an aspiring chef (Monica) could afford such a nice two-bedroom apartment in New York City, it was thanks to rent control.

The city of Los Angeles has rent control rules that only allow a 3% increase annually, however the Rent Stabilization Ordinance which manages the rent control rules in LA, decided to allow rent increases up to 4% for a 12 month period starting in July of 2019. That number is based on the Consumer Price Index.

How often can you increase the rent?
If your rental unit does not have rent control, there are still rules you must follow when it comes to increasing rent. 

In general, the number of times in a year you can increase rent depends on two things. First, what kind of lease you have with your tenant. With a month-to-month lease, rent can be increased every month as long as you provide the proper written notice ahead of time (read above). 

With a longer lease, say one or two years, you cannot increase the rent until the lease is up. The only exception is if the lease contains a stipulation that allows for rent increases. 

How much can you increase rent by?
California does not have a limit on how much you can increase rent. As I explained above, the state does have rules on how much notice you must give if you want to increase the rent. 

Can I raise the rent retroactively?
If you forget to give your tenant the proper notice or simply miss out on the end of the lease, it’s too bad. There’s no legal process in place that allows you to raise rent retroactively. 

These are the biggest questions that I get about renting out a property and raising rent. If you have any more questions or you’re concerned about your specific situation, drop me a line. I’m always happy to help.