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Landlords tend to avoid rent increases since tenants aren't happy about them. They can negatively impact tenant satisfaction or even lead to lease terminations. Unfortunately, landlords sometimes have to implement rent hikes to maintain a positive cash flow, but it's also important to understand when you can do that.
Factors to Consider First
Lease Term
Rent hikes can occur at the end of fixed-term leases, but never within the term unless specifically stated in the lease agreement.
For month-to-month leases, it's acceptable to raise rent, as long as you provide a rent increase notice to your tenant. The adequate notice period is typically 30 days prior to the increase, and the new rent price must be indicated.
Rent Control Laws
While there are no rent control laws in Texas or local ordinances in Houston, there are unspoken rules about how much a landlord can implement a rent increase. Raise the rent too much, and tenants might decide to look for other rental properties instead.
Rental Market
Check other properties for rent in Texas to determine the average rent price, along with the housing market. You can use the market rates to set a competitive price for your rental units, and still find prospective tenants despite the higher rent.
Exceptions
The only exception in Texas rent regulation is in a special circumstance. During catastrophes like oil spills or natural disasters, Texas municipalities are allowed to enact rent stabilization, as per the Texas Property Code Section 214.902. In these times, affordable housing is more needed than ever, and Texas rent increase laws will be set in place when a housing emergency exists.
Justification
When a landlord raises the rent, the reason behind the increase must be both legal and ethical. A landlord can raise rent when it saves the property from a negative cash flow, but not as retaliation for tenant misbehavior. This violates Texas Fair Housing laws, as does rent increases based on protected classes.
Tenant Rights
Tenant unions and advocacy groups can provide support and resources for tenants facing rent hikes, especially since there are no rent regulation laws in place to protect them from rent increases. Respect their rights and acknowledge that the lack of rent control regulations put them at a disadvantage.
How To Keep Tenants After a Rent Increase
- Provide lease renewal incentives. After increasing rental rates, providing incentives might just be the push tenants need to stay in your property.
- Refer tenants to rental assistance. Local governments in major cities like Houston have rental assistance programs, helping those in need make their rent payments.
- Improve the property. Texas landlords can retain tenants more effectively when they create a good living environment for them.
- Follow the necessary state laws regarding rent increases. Follow the procedure, such as giving proper notice and including all notice requirements.
How Much Can a Landlord Raise Rent?
Without rent control measures, property owners can set rent prices based on housing supply and demand, as well as the average rent price within the area. There's a difference between how much landlords can and should price, and that distinction can determine whether you can retain tenants or not.
Hiring Property Management Services to Prevent Rent Hikes
Increased rent prices are sometimes caused by internal factors like inefficient property management. By hiring expert property managers, your rental business can improve its operations, thereby increasing rental income. With a stable and positive cash flow, you might not need to increase your rent prices.
Area Texas Realty & Management can help you with that. Contact us today, and we can help you make the most out of your investment property.
