Rent Increases for Different Types of Tenancies
Most tenants in Oregon have month-to-month rental agreements. In this type of tenancy, tenants pay rent once a month and the rental agreement continues until either the tenant or the landlord decides to end it. In a month-to-month tenancy, rent cannot be increased during the first year after the tenancy begins. At any time after the first year of tenancy, rent can be increased only with a written notice delivered to the tenant at least 90 days prior to the effective date of the rent increase.
The other common type of tenancy is a fixed-term tenancy for a definite amount of time. A rental agreement for a fixed-term is called a lease. Usually, a lease will state the amount of rent the tenant must pay while the lease is in effect. A lease may also list a method for increasing rent during the term. If the lease does not specify a method for increasing the rent, no change in the rent can be made during the fixed term of the lease. And, as with month-to-month tenancies, rent cannot be increased during the first year of a fixed-term tenancy. After the first year of the tenancy, rent can only be increased as specified in the lease, and with at least 90 days’ written notice prior to the effective date of the rent increase. If the fixed term expires, but neither party renews it and the tenant does not move out, then the lease converts to a month-to-month tenancy and rent can be increased thereafter with a 90-day written notice (after the first year of tenancy).
If you happen to have a week-to-week tenancy, the rules are different. A week-to-week tenancy must have all of the following characteristics: (1) There must be a written rental agreement that defines the landlord’s and the tenant’s rights and responsibilities under Oregon law, (2) occupancy is charged on a weekly basis and is payable no less frequently than every 7 days, and (3) there are no fees or security deposits, although the landlord can require payment of an applicant screening charge as allowed by Oregon law. Week-to-week tenants can have their rent increased at any time with at least 7 days’ written notice from the landlord before the effective date of the increase.
Rent Increase Notices
Rent increase notices must be in writing and served on the tenant to be legally effective. Notices may be served by (1) personal delivery to the tenant, (2) by regular, first class mail, or (3) in some cases by posting and mailing the notice if the rental agreement has very specific language required by statute allowing this type of delivery.
(NOTE: Since the “posting and mailing” method of delivery is often subject to challenge in court, it is not a recommended method of delivery for notices.)
All written rent increase notices must specify: (1) The amount of the rent increase, (2) the amount of the new rent, (3) the date on which the increase becomes effective, and (4) facts supporting any claimed exemption from Oregon’s rent control limits (explained below).
Rent increase notices made by personal delivery must be physically placed in the hand of at least one adult tenant. Delivering the notice to a minor occupant or someone who is not a tenant in the rental unit is legally insufficient. Posting, emailing, texting or verbally informing a tenant of a rent increase are also not legally effective methods of service. The landlord or an agent for the landlord can personally deliver the written rent increase notice. Service of a rent increase notice by a sheriff or process server is unnecessary.
Rent increase notices may also be served by regular, first class mail to the tenant. The notice should be addressed to the tenant at the rental premises and to any other known mailing addresses (i.e., PO boxes). Certified or registered mailings are not legally effective methods of serving notices. When rent increase notices are served by mail, at least 3 additional days must be added to the rent increase notice period to allow for mailing, not counting the date mailed.
Rent Increases for Manufactured Dwelling and Floating Home Facilities
The same rules also apply to rent increases for month-to-month and fixed-term tenancies in mobile home parks — also called manufactured dwelling facilities —and floating home facilities. To increase rent in one of these tenancies, the facility landlord must give each affected tenant a written notice at least 90 days before the date of the rent increase. The contents of the rent increase notice and the delivery requirements are the same as described above. Similarly, rent cannot be increased during the first year of the tenancy and the rent in a fixed-term lease cannot be increased unless the lease specifically allows it.
Rent Control Limitations
Oregon now has rent control that limits rent increases for existing tenants. Rent cannot be increased during any 12-month period above the existing rent in an amount greater than 7% plus the consumer price index from the previous calendar year. The “consumer price index” (CPI) refers to the annual 12-month average change in the Consumer Price Index for All Urban Consumers, West Region (All Items), as published by the Bureau of Labor Statistics of the United States Department of Labor in September of the prior calendar year.
By way of example, the applicable CPI in September of 2018 was 3.3%. That means during the calendar year 2019, landlords could not increase rent by more than 10.3% (7% plus the CPI of 3.3% equals 10.3%). The Oregon Department of Administrative Services is required to calculate the maximum annual rent increase percentage and release it to the press by no later than September 30th of each year. The Department is also required to maintain publicly available information on its website regarding the maximum rent increase percentage each year.
There is an important rule on rent increases that prevents landlords from avoiding the rent control limit. Since many month-to-month tenancies can be terminated during the first year of the tenancy with a 30-day, no-cause eviction notice, landlords cannot circumvent the rent control limitations on new, incoming tenants. If a tenancy is terminated during the first year with a 30-day, no-cause notice, the landlord cannot reset the rent for the next tenancy in an amount greater than 7% plus the CPI percentage. This effectively prevents landlords from “flipping” tenants to avoid the rent control limitations.
(NOTE: In any other circumstances, however, landlords are free to set their rent for new tenants at any amount.)
There are two important exemptions on the rent control restrictions. The rent control limitations do not apply to (1) any rental unit when the first certificate of occupancy for the unit was issued less than 15 years from the date of the notice of the rent increase, and (2) any rental unit where the landlord is providing reduced rent to the tenant as part of a federal, state or local program or subsidy. Landlords who increase rent for these types of tenancies above the maximum percentage must specify the facts supporting the exemption in any such rent increase notice issued to the tenants.
Consequences for Violating State Rent Control Limitations
Landlords who increase rent in violation of these restrictions can be found liable to the tenant in an amount equal to three months’ rent, plus actual damages suffered by the tenant. An offending landlord would also be responsible for paying the tenant’s attorney fees and court costs. Any action seeking these damages must be filed within one year after the landlord unlawfully raised the rent.
City of Portland “Relocation Assistance” Payments
Rental units located within the city limits of Portland are also subject to rent limitations imposed by Portland City Code 30.01.085, in addition to the state law requirements. Landlords in Portland are required to give no less than 90 days’ written notice for any increase that is 5% or more over a rolling 12-month period. The notice must specify the amount of the increase, the amount of the new rent, and the date when the increase becomes effective.
If, within 45 calendar days after a tenant receives a rent increase notice indicating a rent increase of 10% or more within a rolling 12-month period, and a tenant provides written notice to the landlord of the tenant’s request for relocation assistance, then, within 31 calendar days of receiving the tenant’s notice, the landlord must pay the tenant relocation assistance in the following amounts: $2,900 for a studio or SRO dwelling unit, $3,300 for a one-bedroom dwelling unit, $4,200 for a two-bedroom dwelling unit, and $4,500 for a three-bedroom or larger dwelling unit.
After receiving the relocation assistance payment from the landlord, the tenant has 6 months from the effective date of the rent increase to either (1) pay back the relocation assistance and remain obligated to pay the increased rent for the duration of the tenancy, or (2) keep the relocation assistance and give the landlord a no-cause tenancy termination notice as required by state law. If the tenant fails to take any action within the 6-month period after the effective date of the rent increase, the tenant is in violation of the city code and the landlord may seek remedies as allowed by law.
In addition, a landlord who conditions the renewal or replacement of an expiring rental agreement on the tenant’s agreement to pay a rent increase of 10% or more within a rolling 12-month period is subject to these provisions for relocation assistance.A landlord who declines to renew or replace an expiring rental agreement on substantially the same terms except for the amount of rent or associated housing costs terminates the rental agreement and is also subject to these described provisions for relocation assistance.
All rent increase notices issued by Portland landlords must include a description of the tenant’s rights and obligations under PCC 30.01.085 and the amount of relocation assistance the tenant may be eligible to receive. Since there are numerous “rights and obligations” under the city code, landlords should seek the advice of a competent attorney to draft a rent increase notice that complies with this requirement.
Under the ordinance, Portland landlords are required to report all payments of relocation assistance to the Portland Housing Bureau within 30 days of making the payment. A reporting form can be found on the website for the Portland Housing Bureau.
Finally, there are a number of specific exemptions from the relocation assistance payments for certain landlords under PCC 30.01.085. Among the most common are exemptions for week-to-week tenancies, tenants who live in the same home as the landlord, and landlords who live in one-half of a duplex that the landlord owns. In most cases, the landlord must apply for the exemption and receive written approval from the Portland Housing Bureau before claiming the exemption from relocation assistance. Landlords should check the website for the Portland Housing Bureau to determine if they might qualify for an exemption and to fill out the required exemption application.
Subsidized Housing Rent Increases
Federal low-income housing subsidies typically restrict a landlord’s right to increase tenant rents, at least for a period of time. Subsidized housing landlords must follow all regulations and contracts that apply to their property in order to raise the rents. If you are a tenant in subsidized housing, you may insist on some evidence that the government agency providing the housing subsidy has approved the rent increase.
In most government owned public housing and government rent subsidy programs, tenants are usually required to pay 30 percent of their incomes for rent. The amount of household income is usually reviewed at least once a year, and the tenant may have an obligation to report increases or decreases in income to the public housing authority and/or to the landlord.