On February 28, 2019, Oregon signed into law SB 608 (Senate Bill 608) and enacted rent control for the entire State of Oregon. What does this mean if you are an investor who owns rental properties in the State of Oregon?
The law allows an annual increase of 7% plus the Consumer Price Index published in September of the prior calendar year. For 2019, the CPI was 3.3% which allowed a maximum increase of 10.3% for 2019. For 2022, the maximum increase is 9.9%.
Be sure to check with your local jurisdiction, such as the City of Portland, as they have enacted their own rent cap and the maximum is 10%; or you will trigger relocation fees.
If your property received it’s CO (certificate of occupancy) in the last 15 years, you are exempt from this cap.
Annual rent increases are important - even in a down or soft market. Why? Even in a soft market, your insurance will still go up along with your property taxes, utilities, HOA dues, maintenance and overhead.
I sometimes get a lot of pushback on rent increases. “My tenant pays the rent on time and I don’t want to rock the boat”. Why are we rewarding a tenant for doing what is expected of them? Does your mortgage company give you a reward for making your payment on time?
By not implementing annual increases, you are doing yourself and your tenant a disservice. They will start to feel entitled to no increase and you will suddenly realize your rent is severely under market rate. If you wish to sell your property as an investment; current rental rates are used as part of the valuation process.
Owning a rental property is a business. Implementing a policy of an annual rent increase is ensuring that your business will continue to thrive and prosper.