Why does rent increase every year

With the growing demand for rental properties, rents tend to rise every year. The average increase in rent per year in the U. S could be anywhere between 2 to 5 percent. This sudden increase causes budgeting problems to tenants and crushes the hopes of many would-be homeowners.

From the perspective of a tenant, nothing seems to change year after year. Thus, it is only natural for a tenant to ask the reason behind rental hikes every year. However, what they fail to see is the happenings in the real estate market and other factors that affect the rental rates. Here is a list of the top 8 parameters that affect rental costs and the reasons why you find apartments raising the rent every year.

Raising the rents is not exactly on the list of to-do things for a landlord, nor do tenants welcome the raise with open hearts. On the contrary, it is a necessary measure to keep up with the current market changes and to manage the property with each passing year.

However, there are certain things that you can do as a tenant when your landlord raises the rent. Most importantly, you must also know what is an acceptable rate of increase.

While most landlords do not raise the rent on an impulse, the whole rent increase scenario may not seem transparent to a tenant.

Landlords do take into account the changing market factors, tax, property value, operational costs, and Consumer Price Index CPI before revising the rental rate.

However, if rent increases are financially draining you, then you must seek alternative measures like negotiation or renting apartments in the nearby developing locations of high-cost areas. Keep up to date with everything rental related, from hints and tips on applying for a rental home, car, or appliances.

Home Blog About Contact Menu. Share this article. Share on facebook Facebook. Share on twitter Twitter. Share on linkedin LinkedIn. Understanding Rent Increases Here is a list of the top 8 parameters that affect rental costs and the reasons why you find apartments raising the rent every year.

This can help confirm the rent increase is appropriate. It may also give you a reason to fight it. Individual states govern rent increase protocol , although the rules are pretty uniform.

If you have a written lease the good news is you should not get completely blindsided by a rent increase. Instead, the property owner has to explain their rent increase policy up-front within the lease you sign. The lease must also explain how often a rent increase can happen. Almost always, the landlord has to wait until the end of the lease to increase rent, but if you sign something that states otherwise you could be stuck with it.

Usually, the landlord supplies a rent increase notice 30 to 60 days in advance, but requirements vary by state and if the lease in question is month-to-month, the rules are a little different. Landlords can raise the rent at any time, as long as they provide 30 days' notice. For any increase, the notice must be in writing. Do not accept a verbal request. If a rent increase notice comes to you out of the blue, you may have the law on your side to fight it and should consider consulting a lawyer.

It is also against the law for a landlord to raise rent just because they think you're a difficult tenant. The rent also cannot be raised in a discriminatory fashion. Rent increase letters are pretty standard, and include the following necessary information :. Landlords send rent increase letters certified mail or delivered by hand. This way, the landlord knows the tenant definitely received it.

Email delivery's not allowed, although the landlord can follow-up that way to make sure you received it. Some landlords opt to go one step further and include a reply form at the bottom.

The tenant checks a box next to a statement of whether they do or don't agree to the rent increase and asks for a signature. If you're totally fine with a rent increase, go ahead and follow whatever instructions are on the letter. Some landlords will require a response, but some won't. If there's any doubt in your mind about the rent increase, take a reasonable amount of time to ponder the pros and cons of accepting versus rejecting.

Tenants who still aren't sure about the rationale, or who wish to negotiate can then challenge the increase, but make sure it's done in a professional and friendly manner. Realizing that there's no consistency when it comes to rent increases leaves the topic open for some negotiation. After some back-and-forth with your property manager , you may decide to stay is the best option.

You also may leave the conversation ready to find somewhere new. Find out how you can get started with Real Estate Winners by clicking here. Advertiser Disclosure We do receive compensation from some affiliate partners whose offers appear here. Millionacres Logo. Tax Deductions Depreciation Capital Gains. New York City Denver Philadelphia. Local Real Estate News. Research Real Estate Glossary. Podcasts Webinars Videos. View Memberships. Search For.

Why landlords raise rent Landlords, despite what many people might think, don't just pocket all the monthly rent money they receive. Here are some expenses a typical residential landlord has: Property maintenance: This includes things like termite service, lawn maintenance, HVAC maintenance, gutter cleaning, and pressure washing.

Property repairs: This includes fixing anything that breaks. And with a home, things break. Property taxes: Landlords pay property taxes to their local government, county, and state.

Landlord insurance: This is similar to homeowners insurance except it covers homes that are being rented out. It covers the property as well as the landlord's personal property if kept there not the tenant's personal property. It also has a liability portion in case a tenant is injured from the fault of the landlord not maintaining the property. Mortgage payments with an ARM in some cases : If the landlord has an adjustable-rate mortgage on the property and the interest rate rises on the loan, so does the landlord's mortgage expense.

HOA dues in some cases : If there's a homeowners association, the landlord pays the dues. Property management fees in some cases : If the landlord uses a property manager, those fees can increase from year to year. Trash and utilities in some cases : Depending on the rental agreement, the landlord could be responsible for paying trash and utilities. If any landlord expense goes up in any given year, the rent increase usually reflects that rise.

Rent increase laws Unless a rental unit is subject to rent control or rent stabilization laws, landlords can typically raise the rent as much as they like, as long as they don't change the rent during the current lease. Discrimination Besides needing to abide by rent control laws if they apply, landlords also cannot raise the rent on, say, Black people and not white people or on families and not single people.

Retaliation In most states, landlords can't raise the rent to retaliate against a tenant for something a tenant did that displeased the landlord. How much rent-increase notice a landlord needs to give Landlords need to notify tenants of a rent increase before they start charging more for rent. Here are three scenarios regarding how much notice a landlord needs to give tenants: Month-to-month tenancy A landlord can change the rent anytime with a month-to-month tenant after giving the proper notice the state requires.

Tenancy with a lease agreement A landlord can change the rent at lease-renewal time. The pitfalls of raising rent The most common pitfall of a landlord raising rent is the tenant leaving. Landlords don't have to raise rent Landlords don't always need to raise rent.

The Millionacres bottom line Rent increases are usually par for the course when renting property. The Motley Fool has a disclosure policy.