Wondering if you can increase the rent on your Dallas property? Here's a guide to rent control and how a rental property management Dallas company can help.
If you are a rental property owner in McKinney, Allen, Plano, Garland, or Frisco who hasn't engaged a rental property management Dallas company yet, you may be wondering if you can increase the rent and if so, by how much. The answer is that yes, you can. This is because there are no rent control laws in McKinney, Allen, Plano, Garland, Frisco, or other parts of Dallas. However, there are some important factors to consider before doing so.
Understanding Rent Control
In states, cities, and municipalities where there are rent control laws, there is a limit on the maximum rent that a property owner can charge for a unit. There is also a limit on the amount a property owner can increase the rent by in a year. Rent control legislation is typically found in large cities where demand for housing is high and the high demand pushes market-rate prices up. The goal is to regulate the housing market by maintaining a base of affordable rental housing for low and middle-income earners.
How Rent Control Works
The way rent control works is that it stops property owners from raising the rent past a set limit. This amount is usually significantly lower than the market rate. Rent increases have to be in line with the guidelines set by a state or city. The guidelines make reference to:
- Vacancy control or true rent control where a landlord can only increase rent up to the maximum amount set by a rent control board when a tenant vacates a unit
- Vacancy decontrol where the rent can be increased based on prevailing rental market conditions. In some states and cities, the maximum amount that can be charged is capped in the form of a percentage over the amount that the previous tenant was charging. Once a new tenant takes up a unit, they will pay only a limited amount in increased rent per year
Pros of Rent Control
For renters, the benefit of rent control is that they are protected from being evicted because they cannot afford rent after it has been raised significantly. Another benefit for renters is that they cannot be evicted without cause. Once a lease has been signed on a rent-controlled apartment, a rental property owner is obligated to renew it every year.
Rent control applies to newly constructed rental units as well. Before they can be approved, new units have to guarantee that a given number of units will be rented out at rates that are below the market rates. In some states and cities, there are also guidelines as to the income bracket of the tenants who will occupy these units. This is put into place to make sure rent-controlled housing is taken up by those who really need it.
Another benefit of rent control is that it keeps people from getting displaced. This reduces the social problem of homelessness especially for the elderly living on a pension that remains the same while rent and other costs go up. It is also very helpful to young people who are just starting out and can't afford to pay exorbitant amounts in rent. Additionally, it helps boost a sense of community and security when the same tenants live in the same neighborhood over a long period of time.
Cons of rent control
Some see rent control differently, including economists. They argue that there are cons to rent control such as:
- Rental property owners may become reluctant to improve their units or construct better ones because they can only charge so much for them. They thus do the bare minimum in repair and maintenance which deters the general development of an area in terms of social and economic growth.
- Limited rental housing because owners opt to sell and cash in rather than make limited amounts in rent each month.
- Limited new rental developments also raise demand and reduce supply which causes a shortage that impacts renters negatively in the form of higher rents.
Where Can Rent-Controlled Housing be Found?
Rent control is very controversial. So much so that it is prohibited in a good number of states as a National Multi-Family Housing Council report shows. It is enacted in several states, including Oregon, Maryland, New York, New Jersey, California, and the District of Columbia.
In Dallas, there is no rent control legislation. However, before increasing rent, there are some factors that an owner should consider. One is the current housing market conditions that may favor owners or renters. A move to increase rent when demand for rental houses is low could backfire in the form of tenants opting to vacate and move to a unit with more favorable rates. Timing also matters. Increasing rent at a time when a disaster is going on such as an epidemic, pandemic, or economic downturn could sour relations with tenants and cause them to consider moving.
Stay Updated with a Rental Property Management Dallas Company
As is the case with any other business, the idea is to have a good relationship with tenants. Also, making the right move at the right time will ensure that you are getting maximum returns from your rental property investment.
Sometimes a rent increase is justified and tenants will (begrudgingly) agree to it. If you manage your rental property on your own right now, you can still benefit from the skill and experience of a rental property management Dallas company. They are a great a source of accurate information on prevailing market conditions and will advise you on when to increase rent and the laws that apply. In the end, it's often a worthwhile investment to leave everything in the hands of an able rental property management Dallas company.