The ultimate goal of rent regulation laws is to help keep housing costs affordable. There are, broadly speaking, four main elements that make up a rent regulation system. These are eviction controls, price controls, landlord-tenant responsibilities, and the oversight aspect.
In the U.S., most states and cities have landlord-tenant laws and some form of a rent regulation system. In these states, landlords must abide by the rent regulation rules, including not raising rent by a certain limit.
In the state of Texas, however, no rent regulation laws exist. The only exceptions are in cases of pandemics or disasters.
In the following article, we here at Bigham & Associates will help you learn about the basics of rent increase laws in Texas.
Are Landlords Limited by How Much They Can Increase Rent?
No. Texas doesn’t have any rent stabilization laws in place. As such, you can increase rent by as much as you want.
In doing so, however, take care not to overcharge your tenants. Sure, increasing rent may mean more profits for you on paper. However, in a practical sense, it may actually turn out to be counterproductive.
Overcharging your tenants will make your property less appealing to prospective tenants. In turn, that may lead to long vacancies and a loss of income.
Do You Need to Provide Your Tenants a Notice Before Increasing Their Rent?
Not necessarily. In fact, unlike some other states, there is no law in Texas that compels landlords to do so. It entirely depends on the type of agreement you have with a tenant.
For fixed-term tenants, you’ll need to wait until their lease has ended in order to raise their rent. The only exception to this is if there are clauses in place that allow for rent increments even before the lease expires.
For tenants on short-term leases, you’ll have to notify them prior to making any rent increments. The notice period should be at least 30 days.
Are There Exceptions to Rent Stabilization Laws in Texas?
As already aforementioned, while Texas doesn’t have any rent stabilization laws in place, some exceptions do exist. According to Section 214.902 of the Property Code, Texas municipalities may be able to pass rent regulation laws in certain conditions.
These laws are applied during a pandemic like Covid-19 or during a disaster like storms, floods, earthquakes, and oil spills.
The state’s governor must approve such proposals, however. They must also terminate the rent stabilization laws when the pandemic or disaster reaches manageable levels. That being said, such laws are hardly ever invoked.
For some perspective, no such law was passed even after Hurricane Harvey caused havoc in Texas. The same is true even in the current situation, where Covid-19 has ravaged economies and caused a surge in unemployment numbers.
However, in March and April, El Paso and Hidalgo did freeze rent increments, but this only lasted for about a month or two.
When Do Rent Increments Become Illegal in the State of Texas?
You may not be able to increase rent in certain conditions. One, if you do it before the lease expires on a tenant operating a fixed-term lease. Two, if you do it against the provisions of the Fair Housing Laws. And three, if the rent increase is borne out of retaliation. (Tex. Prop. Code Ann. § 92.331.)
- Fixed-term Lease: as a landlord, you are not able to increase rent during a fixed-term lease, unless the agreement allows it. If the agreement allows it, then it has to say when and how it’ll be done in the lease
- Fair Housing Laws: both the federal and state Fair Housing Laws prohibit discrimination on a tenant based on their protected characteristics. The characteristics include race, color, sex, disability, religion, familial status, national origin, and citizenship status. You cannot raise the rent because of your tenant falling under one of these categories
- Landlord Retaliation: basically, you cannot increase rent on a tenant as a way to punish them for exercising any of their rights. Such rights include: right to complain to a relevant government agency about unlivable conditions at your property; form or join a tenant’s union to champion for tenants’ rights; right to withhold rent, or ‘repair and deduct’ when the unit becomes less habitable.
Do Late Fees Count as a Rent Increase?
No. If your tenant isn’t able to pay rent when it’s due, you have a right to impose a late fee. This does not count as a rent increase. As per Texas law, in order to charge a late fee, landlords must include the clause in their written leases.
The fee must also be reasonable. The statute defines reasonable in the following three ways:
- Not exceeding 12 percent of the rent for properties with at most 4 units
- Not exceeding 10 percent of the rent for properties with at least 4 units
- Or, exceeds 10 or 12 percent of the rent if it’s related to the landlord’s damages from the late payment, such as expenses, or overhead costs of collecting the late rent
You can only impose the late fee if it remains unpaid for two full days once the rent becomes due.
Unlike many states, rent increase laws in Texas are fairly minimal. By being clear in your lease, you’ll be all set to determine the rent as you wish.
However, the cases where issues come up can be easily avoided by hiring the services of a professional property management company like Bigham & Associates. We know the ins and outs of all the applicable laws, and we’re sure to charge the best rent for your tenants.
Disclaimer: This blog should not be used as a substitute for legal advice from a licensed attorney in your state. Laws frequently change, and this post might not be updated at the time of your reading. Please contact us for any questions you have in regards to this content or any other aspect of your property management needs.