More Americans are leasing properties than ever before as a result of stagnant salaries and rising real estate prices. Renters are constantly concerned about increasing rent costs and worried about being evicted.
The truth is that rental prices have grown by 30 percent in the past five years in developing areas such as Portland, OR, forcing the state to help residents struggling to secure and retain affordable housing.
Recently, Oregon passed regulations for rent control, becoming the first state in the nation to do so. We have drawn up this guide to help you understand how that affects you as a landlord or property manager.
Legislation that caps rent prices in a city or state is referred to as rent control. Municipalities may have different rent control regulations, but they typically limit annual rent hikes and safeguard tenants from eviction without justification.
In the past, times of economic hyperinflation or housing shortages have been followed by the enactment of rent control laws. These regulations seek to preserve a supply of low- and moderate-cost rentals for occupants.
Oregon’s Rent Control
Oregon's governor Kate Brown made history in the first few months of 2019 by enacting the country's first statewide rent control legislation. The state's earlier prohibition on any form of rent control was overturned by Senate Bill 608, which instantly implemented rent rules across the whole state.
The act consists of two parts: tighter guidelines for evictions and a restriction on rental increases. Only multi-unit properties built more than 15 years ago that don't have government-subsidized rent are subject to all these protections. Let's take a closer look at these two legal protections.
Oregon regulates the conditions under which a landlord may evict tenants.
After a year of occupancy at their residence, tenants cannot be kicked out without a reason. The most frequent cause for eviction under the law is failure to pay rent.
Landlords are permitted to dismiss month-to-month renters within the first year with 30 days' notice and no justification. Renters have 30 days to correct any lease agreement infractions prior to a "for cause" eviction.
90 days' notice is required to serve eviction notices for "no-fault" evictions. Suppose the landlord or their relatives are moving into the property, major upgrades have been scheduled, or the house will be removed from the rental market. In that case, the landlord is required to pay the affected tenant a relocation assistance fee (often the equivalent of one month's rent).
Consequences for Breaking This Law
As a landlord, it's important to understand the repercussions of contravening these eviction laws. If you violate this law, you will have to pay the renter three months' rent and the sum of their damages.
Rental Increase Cap
Landlords in Oregon are not permitted to raise rental rates by more than seven percent annually plus inflation.
The US Bureau of Labor Statistics' Consumer Price Index is used to determine inflation, and the maximum yearly rent increase percentage must be calculated by the Oregon Department of Administrative Services and made public by September 30th of each year. Let's look at price increase restrictions based on the type of tenancy.
In Oregon, month-to-month leases are generally the norm for renters. In this kind of tenancy, rent is paid once per month, and the lease is in effect until it is terminated by either party.
In a month-to-month lease, the first year following the commencement of the tenancy is when rent increases are not permitted. The only way to raise the rent after the initial year of occupancy is by giving the renter a written notice at least 90 days before the new rental price takes effect.
Fixed Term Lease
If the conditions for increasing rent are not stipulated clearly in the fixed-term lease, landlords may not increase rent. Moreover, like month-to-month tenancies, rent increases are not permitted within the first year.
With at least seven days written notice prior to the rent increase's effective date, week-to-week occupants are always permitted to have their rent raised.
Understanding Oregon rent control laws is essential if you run a rental business in the state. Contravening these laws could have severe consequences. It's also important to ensure you have the right tools to manage your business effectively. You can save time and streamline your processes by relying on property management software. To try DoorLoop out for free, get in touch with us!
Are you looking for free forms? Click here to download our Oregon forms!
Is there a cap on annual rent increases in Oregon?
Yes. Unlike most states that do not restrict the maximum rent increase each year for rental units, Oregon does impose this restriction. The percentage maximum rent increase, as determined by the Oregon Office of Economic Analysis, is seven percent plus the Consumer Price Index for All Urban Consumers West Region.
What is the Consumer Price Index for All Urban Consumers (CPI-U)?
The CPI-U is a monthly indicator of how prices for a consumer goods market basket and services have changed on average over time. It is based on how urban consumers spend their money.
Can I increase rent in the first year of tenancy?
No. Oregon law does not permit rent increases in the first year.
Is there a penalty for evicting a tenant for a family member to move into the unit?
Yes. Landlords will have to pay the tenant the equivalent of one month's rent.