You are here: Home Latest News Verella’s Round-Up: "Tips for Year-End" – Is It Time to Incorporate Rent Increases in Residential Leases?

Verella’s Round-Up: "Tips for Year-End" – Is It Time to Incorporate Rent Increases in Residential Leases?

verella osborne

Two property owners recently drafted residential Chicago leases in which they have the right to increase rent during the term of the lease. One tied the rent increase directly and proportionately to any real estate tax increase occurring during the lease; the other just inserted a general right to increase the rent by no more than ten percent (10%) during the term. Such rent increases may seem detrimental from a marketing standpoint, but consider the following list of costs that have increased during just the last 12 months:

  • The new Cook County Assessor has already initiated massive increases in property assessments that will likely lead to significant increases in real estate taxes.
  • Eviction filing fees, enacted by Cook County in July 2019, have increased 50%.
  • Eviction lawsuits are now lengthier and more costly as a result of e-filing (e.g., longer trial dates, more costly forms, even worse service by Cook County Sheriff).
  • The recently enacted, badly drafted and downright ignorant “Just Housing Ordinance” will significantly increase your leasing costs and rental losses. The Cook County Commissioners who enacted this ordinance did so with absolutely no knowledge or understanding of the reality of leasing to applicants with criminal histories and its impact on tenants, buildings and neighborhoods, while still holding owners liable for criminal activity on your property. The lengthier, two-screen process now in place for each applicant will add cost and potentially expose you to increased liability for failure to comply.
  • General maintenance and repair costs have increased. Many property owners no longer collect security deposits as an offset to ensuing rental losses due to concern over frivolous CRLTO lawsuits.

So, is it time to incorporate the right to increase rents in your leases? If so, your lease would state the mandated 30-day notice requirement and stipulate the maximum increase. Options include creating an “incremental rent” lease, including step-ups every few months, higher rent during the heating season, etc. Perhaps the time has come for Chicago and Cook County property owners to become more creative in their leasing to mitigate the ever-increasing damage being inflicted on us by fiscally irresponsible governments and inept lawmakers.

 

 

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