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LEGAL DICTIONARY

Rent Gouging

What Is Rent Gouging?

Rent gouging is a term to describe the practice of setting the rent for a property too high or raising a tenant’s existing rent at an unconscionable price.

The laws protecting against this practice vary widely by state, and also tend to protect tenants from eviction without cause. Thirty-seven states, plus the District of Columbia, Puerto Rico, Guam, and the U.S. Virgin Islands, have statutes that define price gouging –including residential rental price gouging– during an emergency.

Landlords must follow the correct steps to terminate a lease and create a new lease with a rent increase. If the tenant lives in a city or state with a rent control ordinance, the price increase cannot exceed the amount allowed under the rule.

For example, if you have a one-year lease, the landlord must wait until the lease is near its expiration to take action to end the legal agreement. Then, the landlord must give the tenant written notice that the rent will be higher after the old lease expires.

The amount of notice a landlord must give depends on the terms of the base rent date of the initial lease agreement. The notice must say that if you decide to stay in the residence, you must pay the higher rental price. No response generally means an acceptance of the new terms.

Start your Rent Increase Letter now

What Are Rent Control Laws?

The goal of rent control laws is to help maintain a supply of affordable rentals for low- to moderate-income residents. In the U.S., rent control laws often follow periods of economic inflation or housing shortages. Federal, state, and local governments also took action to protect renters from getting an eviction notice during the COVID-19 shutdowns.

Rent control laws vary by city or state, but they typically place a cap on the maximum rental price a landlord can charge for a unit and the amount they can raise the rent each year. New York City, Washington, D.C., San Francisco, and Los Angeles are examples of large cities that have had some form of rent control for the past four decades or longer. New York City has had some form of rent regulation since 1943.

While some municipalities do not have laws on the books regarding rent gouging, others are very specific. Here are two examples of rent control statutes:

Oregon Gov. Kate Brown signed Senate Bill 608, a statewide rent control legislation, in 2019. Before then, landlords had no limitations on rental increases. In September 2022, Brown allowed landlords to raise rents by up to 14.6% in 2023. That percentage is the biggest rate increase since the rent control law was enacted.

In California, the Tenant Protection Act of 2019 restricts rent hikes annually to no greater than 5 percent plus the percentage change in the cost of living (CPI) index, or 10 percent, whichever is lower. When the law was first passed, the allowable increase usually ranged between 5 and 9 percent. Due to current rising inflation, every region in the state now meets the threshold for the cap to be set at a 10 percent increase.

In New York City, a Rent Guidelines Board votes yearly on the percentage landlords are allowed to raise the rent on rent-controlled or rent-stabilized dwellings. In June 2022, the board set a 3.25 percent increase for one-year leases and a 5 percent increase for a two-year agreement. For non-rent-regulated apartments, the landlord may increase the rent according to what is considered fair market value.

Other Forms of Rent Gouging

Rent gouging can also include soliciting or accepting money or items in exchange for increasing the prospects that a landlord will approve or renew a lease agreement.

In New York, for example, this form of rent gouging is considered a class B misdemeanor crime under New York law if the value of the goods or money is less than $250.

The penalty for committing this misdemeanor can be three months in jail or a fine of either $500 or twice the defendant’s gain from the offense– or both.

Rent gouging is a class A misdemeanor when the defendant solicits or accepts money or items at a value of $250 or more. A class A misdemeanor is punishable by up to one year in jail, a fine of $1000, or twice the defendant’s gain from the offense– or both.

Rent gouging is a felony when money or goods are solicited or exchanged in addition to lawful rental prices involving at least three different rental properties. The maximum penalty for a class E felony is four years imprisonment.

Helpful Resources:

AAOA - Tenant Sued Landlords Over Price Gouging

Justive.gov - Combating Price Gouging & Hoarding

Nat Law Review - Rental Properties Not Exempt From Price Gouging Laws

Marketwatch - Renters Meet With Biden Administration Officials To Decry Steep Increases By Landlords

JDSupra - Rental Properties Not Exempt From Price Gouging Laws

NY Attorney General - Changes in New York State Rent Law

The Street - If You Think Your Landlord's Gouging You Now, Just Wait

Oregon Legislature - Senate Bill 608

SF Rent Board - Summary of AB 1482 (the California Tenant Protection Act of 2019)

What Is Rent Gouging?

Rent gouging is a term to describe the practice of setting the rent for a property too high or raising a tenant’s existing rent at an unconscionable price.

The laws protecting against this practice vary widely by state, and also tend to protect tenants from eviction without cause. Thirty-seven states, plus the District of Columbia, Puerto Rico, Guam, and the U.S. Virgin Islands, have statutes that define price gouging –including residential rental price gouging– during an emergency.

Landlords must follow the correct steps to terminate a lease and create a new lease with a rent increase. If the tenant lives in a city or state with a rent control ordinance, the price increase cannot exceed the amount allowed under the rule.

For example, if you have a one-year lease, the landlord must wait until the lease is near its expiration to take action to end the legal agreement. Then, the landlord must give the tenant written notice that the rent will be higher after the old lease expires.

The amount of notice a landlord must give depends on the terms of the base rent date of the initial lease agreement. The notice must say that if you decide to stay in the residence, you must pay the higher rental price. No response generally means an acceptance of the new terms.

Start your Rent Increase Letter now

What Are Rent Control Laws?

The goal of rent control laws is to help maintain a supply of affordable rentals for low- to moderate-income residents. In the U.S., rent control laws often follow periods of economic inflation or housing shortages. Federal, state, and local governments also took action to protect renters from getting an eviction notice during the COVID-19 shutdowns.

Rent control laws vary by city or state, but they typically place a cap on the maximum rental price a landlord can charge for a unit and the amount they can raise the rent each year. New York City, Washington, D.C., San Francisco, and Los Angeles are examples of large cities that have had some form of rent control for the past four decades or longer. New York City has had some form of rent regulation since 1943.

While some municipalities do not have laws on the books regarding rent gouging, others are very specific. Here are two examples of rent control statutes:

Oregon Gov. Kate Brown signed Senate Bill 608, a statewide rent control legislation, in 2019. Before then, landlords had no limitations on rental increases. In September 2022, Brown allowed landlords to raise rents by up to 14.6% in 2023. That percentage is the biggest rate increase since the rent control law was enacted.

In California, the Tenant Protection Act of 2019 restricts rent hikes annually to no greater than 5 percent plus the percentage change in the cost of living (CPI) index, or 10 percent, whichever is lower. When the law was first passed, the allowable increase usually ranged between 5 and 9 percent. Due to current rising inflation, every region in the state now meets the threshold for the cap to be set at a 10 percent increase.

In New York City, a Rent Guidelines Board votes yearly on the percentage landlords are allowed to raise the rent on rent-controlled or rent-stabilized dwellings. In June 2022, the board set a 3.25 percent increase for one-year leases and a 5 percent increase for a two-year agreement. For non-rent-regulated apartments, the landlord may increase the rent according to what is considered fair market value.

Other Forms of Rent Gouging

Rent gouging can also include soliciting or accepting money or items in exchange for increasing the prospects that a landlord will approve or renew a lease agreement.

In New York, for example, this form of rent gouging is considered a class B misdemeanor crime under New York law if the value of the goods or money is less than $250.

The penalty for committing this misdemeanor can be three months in jail or a fine of either $500 or twice the defendant’s gain from the offense– or both.

Rent gouging is a class A misdemeanor when the defendant solicits or accepts money or items at a value of $250 or more. A class A misdemeanor is punishable by up to one year in jail, a fine of $1000, or twice the defendant’s gain from the offense– or both.

Rent gouging is a felony when money or goods are solicited or exchanged in addition to lawful rental prices involving at least three different rental properties. The maximum penalty for a class E felony is four years imprisonment.

Helpful Resources:

AAOA - Tenant Sued Landlords Over Price Gouging

Justive.gov - Combating Price Gouging & Hoarding

Nat Law Review - Rental Properties Not Exempt From Price Gouging Laws

Marketwatch - Renters Meet With Biden Administration Officials To Decry Steep Increases By Landlords

JDSupra - Rental Properties Not Exempt From Price Gouging Laws

NY Attorney General - Changes in New York State Rent Law

The Street - If You Think Your Landlord's Gouging You Now, Just Wait

Oregon Legislature - Senate Bill 608

SF Rent Board - Summary of AB 1482 (the California Tenant Protection Act of 2019)