Raising Longtime Tenants’ Rent Is Fair, But Do It With Care
Question: I own six rental condos in the San Gabriel Valley and there is no rent control. Most of the tenants have been with me for a long time. As a result, their rents are unrealistically low in today’s marketplace.
Do you think I should raise the rents substantially to catch up with today’s rates? And won’t that leave me open to having some vacant units if they move out?
Attorney Steven R. Kellman replies:
You should probably not raise your rents on existing tenants too much too soon. While you may feel that this view shows a bias toward tenants, it just makes good business sense.
If you have good tenants, it actually pays to keep them. When rents are too high, your tenants may simply move on to a better deal incurring additional costs to you in the turnover. The benefit of a rapid increase in the rents may by wiped out in getting lower-quality replacement tenants if yours have chosen to move.
Also, tenants tend to be more demanding when locked into a high-dollar lease. They want more services since they feel they are paying top dollar, which they may be paying with a large raise.
Rents should be adjusted, however, to reflect their true value. This promotes investment for the purchase or improvement of rental property. If rents are too low, landlords say they are not inclined to provide as many nice rental units as tenants want. So, ultimately, raise rents if you need to, but do show care and respect for more than just the bottom line.
Attorney Ted Smith replies:
As the landlord’s attorney, I have to tell you that you have the legal right to raise rents with proper written notice. In California, unless you are in a rent-control area, there is no ceiling on the amount or frequency of rental increases.
All legalities aside, you should think about how to “sell” the increase to your residents to avoid unintended consequences--like everybody moving out.
Some rental owners--most of whom have owned their buildings free and clear for years--virtually never raise rents. Instead, they opt for long-term tenants. But most agree that rents should stay roughly in keeping with the market. So raise the rents, keeping them just under your competitors. That way, hopefully, you’ll be able to convince your tenants to stay.
Disputing Deductions After Moving Out
Q: We rented a home for a couple of years before moving out recently. Our agreement stated that the owner paid for the gardener and half of the bimonthly water bill. Our security deposit disposition report had a deduction for the half of the last month’s water bill and a $250 deduction for firewood. We were going to pay our share of the closing water bill and I object to the owner just automatically deducting it. The firewood had to be removed from the property due to a severe rodent infestation, which I handled personally at no cost or inconvenience to the owner. Are these deductions reasonable?
Property manager Robert Griswold replies:
It is my experience that the majority of disputes concerning security deposit occur due to a lack of communication.
It appears that you expected to pay for the water bill and if the owner had provided you with a copy you would have paid it directly or mutually agreed to have the amount deducted from your security deposit. Either way the result would be essentially the same, so I feel that this deduction is reasonable.
The $250 deduction for the firewood also seems to be the result of a breakdown in communication. Hopefully, if you had advised the owners before you removed the firewood, they would have either expressed their concern then or agreed that it was necessary to remove the wood.
Since they are charging you, I assume that they either were not notified, they have forgotten that they approved at the time or they did not approve and you removed the wood anyway. That makes it hard to determine whether this deduction is reasonable without more information.
At this point, you need to contact the owner by phone or in writing to formally demand the return of your full deposit. Obviously, if the firewood was the source of a rodent problem, it would be the owner’s responsibility to address the problem.
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This column is written by property manager Robert Griswold, host of “Real Estate Today!” (KSDO-AM [1130], 10 a.m. to noon Saturdays), and attorneys Steven R. Kellman, director of the Tenants’ Legal Center, and Ted Smith, principal in a law firm representing landlords.
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If you have a question, send it to Rental Roundtable, Real Estate section, L.A. Times, 202 W. 1st St., L.A., CA 90012. Or e-mail rgriswold.latimes@retodayradio.com. Questions should be brief and to the point and cannot be answered individually.
