You’re wrapping up a great 12 months in your apartment. Now that your lease agreement is coming to a close, you have a decision to make: Do I move or renew my apartment lease? Once your current lease expires, you’ll almost certainly see some kind of increase in your rent, should you decide to stay. It’s not too surprising though; this world seems to be getting more expensive by the minute.
With a rent increase being a high possibility, you’ll have to consider if the hike is sustainable for your living situation and budget, or if you need to look for a new place to live. You don’t want to act with haste and move just because you’re unhappy about the raise in rent or be quick to accept it either. First things first – take a deep breath and we’ll go over your options as well as why landlords raise rents after a lease term.
Can My Landlord Raise My Rent?
Yes, they can and many landlords do – but only after your term is over, not mid-lease. A landlord can’t raise your rent in the middle of your contract; the only exception would be if the agreement you signed at the start of your tenancy included a clause that allows for changes to be made during the lease.
Your landlord can legally raise your rent. CoStar Group reports that the average rent increase is 3.18% each year. There are reasons (some out of his/her control) why a landlord might increase the rent for his or her apartments, including:
- Inflation. Many industries adjust for annual inflation. Similar apartments within an area might all be raising their rents, which is why you’re seeing your home’s rent go up.
- Higher Property Tax. A homeowner pays their property tax through an escrow account managed by their mortgage lender. A renter’s portion of property tax is bundled into their total rent. An increase in property taxes made by the local government could be a reason your landlord is increasing rent.
- Property Updates and Landscaping. Sometimes landlords need to make updates to the property or apartments. This kind of maintenance and landscaping costs money, which is why your rent might rise.
Do Rents in Rent-Controlled and Rent-Stabilized Apartments Increase?
While the rent can increase in both types of apartments, it’s not done nearly as often and is heavily regulated by a city rent board. When the home is rent-controlled or rent-stabilized, landlords are limited by the local government on how much and when they can raise the rents on their tenants. You’ll typically find these apartments in high rent areas like California or New York. If a landlord needs to increase rent for a specific reason, they will likely have to petition the area rent board in order to do so. Again, it all depends on local laws.
What You Can Do if Your Landlord Is Increasing Your Rent.
If your landlord is increasing your rent, you have some things to think through before making a decision, such as your finances and overall budget. Will you be able to afford your home once the rent increase goes into effect? Rule of thumb when calculating your rent is to allocate no more than 30% of your monthly after-tax income to it. If you’re setting a budget for yourself, the 50/30/20 rule comes into play. You can read more on the breakdown here.
Maybe you want to stay because you love the area’s great schools and proximity to delicious restaurants. You could talk with your landlord about including a concession in your new lease to balance the rent increase in your eyes. Items you may want to talk about might include moving into a newly renovated apartment, replacing the flooring in your home, or giving you a prime spot in the parking garage so you’re close to the elevators.
Hear me out – what if you tried negotiating your rent? If you’ve been a great resident (paid rent on time, for example) then you’re already in a good position to have an open discussion with your landlord. You might be able to seal the deal by signing a longer-term lease than your previous one. Longer lease agreements, such as a 24-month contract, typically have lower rates and you can remain put in the home you love. Sounds like a win-win situation to me!
But if you must move, you’ll want to begin your apartment search by looking for properties with comparable rents that you’re comfortable paying. However, this might mean sacrificing the locale you love and moving a bit further to accommodate your budget. The Apartments.com pricing filter can help you find apartments within budget – and in your preferred area, too!
- How long does a long-term lease protect me from a rent increase?
Long-term contracts can protect you from a rent increase for as long as the apartment is leased. If you signed a two-year lease on an apartment, you won’t have to deal with an increase until your lease has expired. If you absolutely love your home, you might want to consider a longer lease agreement.
When Will I Receive My Rent Increase Letter From My Landlord?
Your landlord should notify you of your rent increase between 30 and 60 days before your lease is officially over. However, laws vary by state and could be different. You’ll get a rent increase letter delivered to your door or mailbox. Here’s what your letter might contain, which could help you make your decision:
- Apartment Number
- Current Rent
- Future Rent
- Amount Difference in Rent
- Decision Due Date
- New Rent Start Date
- First Payment Date
- Lease Termination and Move-Out Date
As you can see, there’s so much that goes into a landlord’s reasoning for raising your rent. It’s never fun to pay more for the same apartment - but maybe your landlord has a surprise in store for your use and enjoyment, like new community amenities to use this summer (a new tennis court, perhaps?). Whatever your decision may be, make the final move based on what will work best for your situation.
