On September 13th, state officials announced that Oregon landlords could raise rents by as much as 14.6% in 2023. That represents a nearly five-point increase over the 2022 Oregon rent increase cap, which surprised many people. The upcoming increase is also the largest since Oregon began regulating rent prices as part of its statewide rent control efforts after the passage of SB 608 in 2019. State officials cited inflation as the driving force behind this significant jump.

2023 Oregon Rent Increase Cap

Not only is the 2023 Oregon rent increase cap the largest since rent control began in Oregon in 2019, but it’s also a historically large jump. State officials published a table showing the maximum annual rent increase under the current formula since 2020 if statewide rent control had been in place. Before 2023, the Oregon rent increase cap never rose above 11% and mainly hovered in the eight and nine percent range. 2023’s jump is more evidence of how inflation continues impacting American pocketbooks.

The rules governing Oregon’s rent control legislation are straightforward. Landlords cannot raise tenants’ rent in their first year of occupancy. After that, landlords may only increase rent by 7% plus the Consumer Price Index (CPI), West Region, published by the Bureau of Labor Statistics. The state legislature exempted homes constructed in the last 15 years from rent control in the hopes of spurring new housing construction. Additionally, subsidized affordable housing units are exempt because they’re governed by their own price controls.

According to apartment rental company Zumper, the average price of a one-bedroom apartment in Portland is currently $1,500. If landlords raise rates by the total allowable percentage, the average cost of a Portland one-bedroom could climb to over $1,700. Many advocates worry these potential increases will only worsen the affordable housing problem in an area already struggling with a housing shortage.

Rent Increase Impact Unknown

It’s important to note that just because landlords can raise rental rates by 14.6% doesn’t mean they will choose to do so. For example, an annual rent increase of more than 9.9% triggers Portland’s Renter Relocation Assistance law. This means landlords enacting a full 14.6% rent increase would also be responsible for relocation payments as high as $4,500, potentially negating any rental gains. However, inflation is impacting landlords just like tenants, so it’s unclear how much rents will increase statewide in 2023.

Notifying Tenants of Rent Increases

Oregon has very specific rules around notifying tenants of rent increases. Landlords must deliver rent increase notification in writing 90 days before the intended increase. Additionally, all notifications must contain the following information:

  • The rent increase amount.
  • The new rental rate.
  • Date the increase goes into effect.
  • Facts supporting exemption from rent control limits.

Landlords must deliver rent increase notifications by regular, first-class mail or personal delivery to one adult tenant. Landlords who violate Oregon rent increase cap rules also face stiff penalties. These include paying the tenant an amount equal to three months’ rent, actual damages, and tenant attorney and court costs.

SB 208’s Impact

When Oregon Senate Bill 208 was passed in 2019, it made waves as the country’s first statewide rent control bill. In addition to capping annual rent increases, the bill also placed strict limitations on no-cause evictions. Under the new guidelines, landlords could issue a 90-day no-cause eviction only in the first year of a tenant’s residency. After that first year, the legislation limited no-cause evictions to only a few acceptable categories, including:

  • The unit is being demolished.
  • The landlord intends to use the unit for something other than a residence.
  • The unit is undergoing renovations or repairs that make it unsafe to inhabit.
  • The owner plans to move into the unit.
  • Someone else bought the unit and intended to move it.

In 2020, California enacted its own statewide rent control law containing a few key differences from Oregon’s statute. Rather than basing rent control limits on the West Coast CPI, California uses a metro area index. This approach means that rent price limits could be different in San Francisco than in Los Angeles or Sacramento. California’s law also sunsets in 2030 unless lawmakers renew the legislation beforehand. Oregon’s law contains no similar sunset provision.

Choose Professional Property Management

For do-it-yourself property managers, keeping track of housing rules and regulations can be overwhelming. Not only must you track your property’s profits and losses and determine an appropriate rent increase, but you must also align those increases with state standards and notify your tenant of the increase correctly. All these requirements are why many DIY landlords choose to hire professional property managers to oversee their units. A good property management company handles every detail, from marketing a propertyscreening tenants, arranging move-in, and conducting annual inspections. Your property manager should also track housing law changes that could impact you and make appropriate adjustments.

Most DIY landlords who switch to a professional property manager find that their properties earn more money. That’s because professionals can set more accurate rental rates and keep those rates in line with the market as time goes by. We’d love to talk if you’re interested in learning how a property manager can help you run a more efficient business. Rent Portland Homes by Darla Andrew is one of Portland’s finest property management companies. Read a few of our Google reviews to see how our customers view us and then call or text Darla directly at (503) 515-3170. You can also fill out the form on our contact page, and we’ll get back to you immediately.