STATE OF OREGON ANNOUNCES ANNUAL RENT INCREASE CAPPED AT 9.9%
October 29, 2021
In September, the State of Oregon’s Office of Economic Analysis (OEA) announced the maximum annual rent increase percentage allowed for 2022. Landlords may increase rents by as much as 9.9 percent.
During the 2019 legislative session, lawmakers passed SB 608 as an emergency rent control measure. The law requires Oregon’s Department of Administrative Services to calculate and post the following year’s increase by September 30 of each year. (https://www.oregon.gov/das/OEA/Pages/Rent-stabilization.aspx.)
The calculation is based upon 7 percent plus the West Coast Consumer Price Index, as most recently published by the Bureau of Labor Statistics.
Since the rent hike law was enacted three years ago, increases have been approved at 10.3 percent in 2019; 9.9 percent in 2020; and 9.2 percent in 2021.
The rent cap does not apply to the following:
• New construction or rentals built within the last 15 years
• Properties providing reduced rent to tenants with a federal, state or local subsidy (Section 8 Housing Choice Vouchers not applicable)
Per SB 608, sanctions for increasing a tenant’s rent above the maximum amount allowed include a penalty of 3 months’ rent; actual damages sustained by the tenant; and attorney fees and legal costs.
While a rent increase of nearly 10 percent feels like a lot to many households, State Economist Josh Lehner called the hike “relatively tame” in light of current inflation, which recent Consumer Price Index figures set at about 4 percent. This figure is approximately twice the Federal Reserve’s 2 percent target.
Every landlord will not opt to increase rents by the maximum allowed, but the ongoing tug-of-war between supply and demand continues to drive rents upward. According to Willamette Week, vacancies in multi-family apartment buildings came in at just under 5 percent in the third quarter of 2021. As a result, rents have hit record highs. Commercial real estate platform CoStar reported that rents in the Portland metro are now averaging $1,508 per unit. Many of those units are in newer buildings and therefore not subject to the rent cap. CoStar further reported that double-digit gains are predicted for the fourth quarter of 2021 and the first quarter of 2022.
Meanwhile, many tenants who were hit hard by the pandemic and promised state rental assistance are still waiting for funds to arrive. And about half of applications for assistance in Clackamas, Multnomah and Washington counties are still awaiting initial review.
Although many feel the current rate hike formula gives landlords to much leeway, Lehner cautioned that strictly limiting rent hikes can cause other problems. “That can actually really restrict new development, and we know we're a housing-constrained economy here in the Northwest,” he told local KTVZ news.
As a reliable source of financing to real estate professionals seeking capital for construction, rehabilitation, repositioning, conversion or additions to commercial and residential properties in the Western United States, Freedom Financial Funds, LLC strives to keep its investors and borrowers well informed about the markets it serves. In only five years, Freedom has executed more than $500M in transactions from its locations in Arizona, California, Oregon and Texas.