It is great news for apartment owners that the market rent for apartments is improving after the Covid dip, but does this mean owners can immediately increase the rent? Well that depends…
Many owners have been incredibly supportive of renters during the difficult Covid times and provided rent concessions. Other owners have incurred the decline in market rent that has been a boon for many less impacted renters.
The question of “can an owner increase the rent or not” depends firstly and obviously on market forces. For some apartment owners the rent didn’t decline during Covid so the passing or current rent may be already at market. For other owners who’s rent may have dropped over the last 2 years, the market rent for your apartment may be starting to move ahead of the current rent. In this case owners should speak directly with their property manager to confirm their best course of action and what rules apply to them but here are some pointers for each lease situation when the market rent is exceeding the current rent.
- If the lease has expired and the renter is occupying the apartment on a month to month (periodic) basis then yes, the owner can ask for a rent increase provided it hasn’t increased in the last 12 months.
- If the renter is on their initial fixed term lease (regardless of the length of lease), then the rent can be increased at the end of that lease, but cannot be increased again for another 12 months after that regardless of the new lease term.
So what happens when an owner requests an increase? Well the renter can either
- Pay the new rent and stay on,
- Move out, or
We try to avoid the fourth option which has the rent determined by an independent party if the renter thinks the increases is excessive.
The timing of the request for increase is another consideration as we expect the market rent to continue to improve over the next 12 months.