Can a Property Manager Raise Rent?
Rent is one of the primary sources of income for landlords and property managers. However, it is also a sensitive issue for tenants, who may struggle to pay increased rent or may feel that it is unreasonable for their landlord to raise the rent. In this quick article, we will look at whether a property manager has the power to raise rent, the legal procedures involved, and what factors influence rent increases.
Legalities of Rent Increases
In most states, a property manager or landlord can legally raise the rent on a rental property but there are specific rules and regulations that govern rent increases, and these vary from state to state. In some states, landlords must provide tenants with a certain amount of notice before raising the rent, while in others, they must have a valid reason for raising the rent, such as maintenance and repair expenses. There is an upcoming government policy being looked at that will put a cap on rent increases at a federal level.
It is important to note that rent control and rent stabilization laws may apply in certain jurisdictions, which limit the amount by which landlords can raise the rent. In these cases, landlords must follow the rules and regulations set forth by these laws.
Factors That Influence Rent Increases
While landlords and property managers have the power to raise the rent, they must consider several factors before doing so. These include:
1. Market conditions: The current state of the rental market can significantly impact rent prices. For example, if the demand for rental properties is high, landlords may be able to increase the rent. However, if the market is slow, landlords may need to be more cautious about raising the rent. Like any good or service, everything is worth what people are willing to pay for it.
2. Maintenance and repairs: Landlords and property managers must maintain their rental properties in good condition. If they need to carry out repairs or upgrades, they may need to increase the rent to cover these costs.
This may sound like a "well it's the landlords issue if their houses wasn't built well" and that may be true, but either they increase the rent or they sell the home. Then a renter is out either way.
3. Operating expenses: Operating expenses, such as property taxes, insurance, and utility bills, can also impact the rent. If these expenses increase, landlords may need to raise the rent to cover these costs. Places near Austin, TX just recently had a massive 50% tax increase for secondary homes. When property taxes increase from $2,000 to $3,000, that's almost $100 a month that the landlord is now responsible for. Many landlords only make anywhere from $100-$300 per home so that $100 can really do some damage.
4. Tenant turnover: If a tenant leaves a rental property, landlords may choose to raise the rent to reflect current market conditions or to compensate for any damages that the previous tenant may have caused.
Rent Increase Statistics
According to a recent survey, the average rent increase in the United States is 3.6%. However, this figure varies from state to state, with some states experiencing higher rent increases than others. For example, in California, the average rent increase is 4.6%, while in Texas, it is 3.2%.
In conclusion, property managers have the power to raise the rent, but they must follow the rules and regulations set forth by the state and must consider various factors before doing so. By understanding the legal procedures and factors that influence rent increases, property managers and landlords can make informed decisions that are in the best interests of both the tenant and the rental property.
As a property investor myself, I would prefer to keep a great-standing tenant at a fixed rent rate than increase rents and constantly have to do a turnover every year. Great tenants are better than a few extra bucks, in my opinion.
North Carolina, where I run my property management business near Lake Norman, does not have rent control - so raised rents are a normal and legal deal.