Rent Increase Addendum vs. Rent Increase Notice
A rent increase addendum and a rent increase notice serve different purposes when adjusting the rent. An addendum modifies an existing lease, while a notice informs tenants of an upcoming increase. Here are the key distinctions:
| Criteria | Rent Increase Addendum | Rent Increase Notice |
|---|---|---|
| Purpose | Updates the lease with a new rent amount. | Notifies tenants of an upcoming rent increase. |
| Timing | Signed anytime both parties agree, often at renewal. | Must be sent in advance, following local laws. |
| Signatures | Requires both landlord and tenant signatures. | No signatures needed. |
| Legal Effect | Becomes part of the lease once signed. | Serves as a formal notice, not a contract. |
Is It Legal for a Landlord to Raise the Rent?
A landlord’s ability to legally increase rent depends on several factors:
- The lease agreement terms: Fixed-term leases generally prohibit mid-term increases unless an addendum allows it.
- Local rent control laws: Some jurisdictions limit how much and how often rent can be raised.
- The reason for the increase: Rent increases must comply with housing laws and cannot be retaliatory or discriminatory.
If rent control laws exist, the landlord must follow the legal limits and frequency rates for rent increases.
A landlord cannot raise rent in retaliation (e.g., after a tenant files a complaint) or for any discriminatory reason under the Fair Housing Act.
When Can a Landlord Raise the Rent?
Rent increases depend on the lease type and local laws. In some cases, a landlord may need a rent increase addendum or a lease renewal agreement to legally adjust the rent while keeping the lease terms intact.
- Mid-Lease (With a Rent Increase Addendum): Rent cannot be raised during a fixed-term lease in most cases. However, if the lease includes a rent escalation clause or both parties agree to modify the lease, a rent change addendum can be signed to legally adjust the rent amount.
- At Lease Renewal: When a lease term is ending, the landlord can propose a rent increase. If the tenant agrees to the new rent, they may sign an addendum or a Lease Renewal Agreement to formalize the change without drafting a new lease.
- For Periodic Leases: In month-to-month or other periodic agreements, landlords can raise rent with proper notice. A rent increase addendum may be used if the tenant accepts the new rent and wants to continue under the revised terms.
Price Gouging Considerations
Some states, like California, limit rent increases during a state of emergency. For example, California Penal Code § 396 caps increases at 10% while an emergency order is in effect. Before changing rent, landlords should also check whether a state of emergency is in place, as this may impact legal limits on rent increases.
Reasons for a Rent Increase or Decrease
As a landlord, you may need to create a rent change addendum, indicating an increase or decrease. Explore some reasons for each below:
Reasons for a Rent Increase
- Inflation: You may ask for a rent increase to reflect inflation costs in your area.
- Tenant Added to the Lease: If you let the primary tenant add another person to the lease, you may ask for increased rent to reflect the addition.
- Property Improvements: Improvements to the property, such as new amenities, may justify a rent increase.
Reasons for a Rent Decrease
- Financial Hardship: A tenant experiencing financial hardship may cause you to decrease the rent so you can still receive on-time payments.
- Tenant Removed from the Lease: If you remove a tenant from the lease, you may decrease the rent amount to make the payments more affordable for the remaining tenant.
- Market Competitiveness: If you want to remain an enticing option to a tenant in a competitive market, you may decrease the rent.
Rent Change Addendum Sample
Download a rent change addendum template as a PDF or Word file below:
