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Whether you’re a tenant or a property owner, the subject of rising rent has probably crossed your mind, leading you to question whether it’s the right choice given your circumstances. Here are several points for both tenants and landlords to ponder when considering rent hikes.
Understanding Rising Rent from a Tenant’s Perspective
Rent, usually paid on a monthly basis, grants you the right to occupy a house, condo, apartment, or other type of property. The agreed amount is fixed at the signing of the lease agreement, and it remains unchanged during the period of this contract.
Nevertheless, when this contract comes to an end, the property owner or management firm can opt to hike the rent. This practice is commonplace and frequently mirrors the escalating cost of living in a particular area. If property values are on the rise, it’s likely that your rent might follow suit.
Certain landlords place a limit on how much they can escalate the rent annually. For instance, they may decide not to increase the rent by more than 10% each year. In several regions, there are laws, known as rent control, that set this restriction to safeguard tenants. This also curbs rent prices from spiraling out of control in areas with a high cost of living.
Navigating Rising Rent as a Landlord
As a landlord, you can determine your property’s rent rate and modify it whenever you wish, provided it’s not during a fixed lease period. Yet, there are a few factors to take into account when contemplating a rent increase.
Firstly, you need to understand the average rent for similar properties in your area. Overpricing your rent might deter potential tenants, and without a tenant, you won’t receive any rental income. Engaging with an experienced property manager could assist you in setting a competitive rent price.
Secondly, have you made any significant upgrades to the property? If you previously charged $1200 per month but have since added a swimming pool, enclosed yard, or other appealing features, you might justify a rent increase. Be prepared, however, for the possibility of your tenant seeking more affordable accommodations, especially if they didn’t approve of the enhancements.