Why Do Apartment Rents Rise Every Year?

Peter Chambers

Jan 11, 2020


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Tenants choose renting for a variety of reasons. You might live in a high-cost area, need time to save for a down payment, or simply don’t want the responsibility of maintaining a home. A lot of this comes down to cost, but even then, renting can be unpredictable. So why do apartments raise rent every year?

When landlords raise rent, it can be an unwelcome development. Even tenants who aren’t interested in homeownership can find it difficult to budget, and those who are interested have to delay their dreams because they’re unable to save enough to feel secure in their investment.

If you’re allocating $750 to $1,000 or more every month to rent, you’re no doubt curious to learn where that money is going and what factors influence your apartment’s rate. Here are 3 questions you might be asking when you receive notice from your landlord:

1. Again?! Why Does My Rent Increase Every Year?

The short answer is that your landlord is responding to market changes, inflation and the costs of property maintenance.

But that’s a pretty broad statement, and you have finances to calculate. You’ll want to know the specifics of why some apartment rents rise every year, so you can make sure the new rate makes sense. Read on to dig into those factors a little more and better understand the ins and outs of your landlord’s decisions.

2. What are the Specific Variables That Influence Rent?

Changing Markets

Market factors are enormously influential in determining a rent increase. The cost of property ownership changes from year to year, for one. Interest rates, insurance and municipal rates all affect a landlord’s annual recalculations. They also have to assess the affordability of their tenants during periods of high inflation.

Property Maintenance

It takes a lot of number crunching to ensure operating costs remain viable. A landlord not only has to account for the market, but they also have to pay for maintenance to their properties and handle repair work. If there are  multiple occupants living in a single building, these fixes can prove expensive, compounding over time.

Property Values

A landlord might choose to raise the rent because they’ve made upgrades to a property, improving its value. The development of a new school or shopping center in the area might also contribute to their final rate. Investors know these additions to the neighborhood are desirable to families and workers. If you live in an attractive area, you’ll deal with increased competition each year.

Profit Incentives

Besides the logistics, you have to remember that a landlord is running a business. After everything’s said and done, a landlord can choose to increase their rent just because they feel like it. They’re not legally obligated to provide a reason for their decision, and it’s well within their rights to charge you more for housing if they so choose. That said, you may also have some leverage.

3. How Can I Respond to My Rent Rising?

First, understand your rental rights. Your landlord can’t raise the rent if you’re in the middle of your lease. They’ll have to wait until you’re nearing its end, unless you lease month to month. In that case, they’ll provide notice of the adjustment. In most situations, you won’t have any legal basis on which to challenge their decision, unless your building is rent-stabilized or rent-controlled.

You might find a little flexibility, however, if you feel comfortable negotiating. There are some ways in which landlords and tenants can both benefit from discussing rent. Some landlords, for instance, might be interested in offering multi-year leases. These lock you into the current rental rate for a longer term, which also cuts back the landlord’s risk of turnover. Of course, you might not be sure you want to commit to a lease for more than one year.

Are you a DIY-er? If you rent in a small enough building or a single home, you could also provide services to reduce the landlord’s expenses. Shoveling their walkways of snow in the winter or raking leaves in the fall are good examples. Without your assistance, they’d have to hire someone to do the job. You’re reducing the overall cost of maintaining their property — if you have the experience.

In short, you want to prove your value. It usually isn’t difficult for a landlord to replace a tenant who can’t pay. Your best course of action is to show that you’re irreplaceable, whether you keep your unit in good condition, reduce your noise, make referrals or go the extra mile to help. Your good reputation will improve your chances of securing last year’s rate.

Why Do Apartments Raise Rent Every Year?

The natural response to receiving a notice is an exasperated “Why is my rent going up every year?” In many cases, it can feel like nothing has changed, and that you’re paying more for the same living experience.

But it’s important to remember that tenants can’t see everything behind the scenes. Most landlords don’t raise their rent on a whim. Instead, they’re recalculating their rates to account for market factors, whether they’re managing the fluctuating cost of property ownership or reviewing the Consumer Price Index.

They also have to adjust for the maintenance expenses inherent to a residential property and all the repair work that ownership entails. Owning and managing a property is a significant undertaking, and tenants don’t always see the other side of it.

At the same time, tenants deserve fair rental rates, and you should know when it’s reasonable to communicate your concerns. If you’re a good, reliable tenant, then you may have some more leeway in opening up discussion with your landlord. Willingness to compromise can be a fair way to approach your apartment’s rising rental rate.

Finding out your living expenses are increasing each year can be frustrating. But it’s important to remember that your landlord is probably not out for your blood. Understanding why apartments raise rent every year can help you find ways to negotiate your case, and settle into a lease that fits your financial needs.

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