MHCO Columns

Phil Querin Article: When Does the Rent Cap Start under SB 611?

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Phil Querin
MHCO Legal Counsel

Introduction. SB 611 amended the Rent Cap law. It became effective on July 6, 2023, meaning that all rent increase notices on or after that date had to conform to the new law. Section 5 of SB 611 applies to mobile home tenancies. It is substantially similar to the existing statute (ORS 90.600) but clarifies things a bit. The only major change is that there is now a rent cap set at 10%.


 

The Calculation. Unless exempted by ORS 90.600, a Rent Increase for any calendar year may not exceedthe lesser of: (a) ten percent (10%) or (b) the sum of seven percent (7.00%) times the Current Rent (7% XCurrent Rent) plus the percentage change in the consumer price index (“CPI”) times the Current Rent (%of CPI Change X Current Rent), hereinafter collectively referred to as the “Rent Cap”).

 

Publication of Consumer Price Index (“CPI”): This is the annual 12-month average change in theConsumer Price Index for All Urban Consumers, West Region (All Items). It is published by the Bureauof Labor Statistics of the United States Department of Labor (“BLS”) at the end of September of each year. Landlords are to use the CPI numbers that are operational when the rent increase notice is sent.

 

If a rent increase notice is sent out before the September 30, 2023 numbers are out, then landlords must use the current calculation. The max rent increase will always be between 7.00% and 10% (between 7.0% and 9.9% if in Portland) subject to the Rent Cap if it applies. It does not apply if the certificate of occupancy of the dwelling is less than 15 years, or it is on a state/local/federal affordable housing program.

 

MHCO Form 49. We will be amending the form before the end of September when the new CPI numbers are released. The 2023 numbers will be operational until Sept 30, 2024. [1]

Form 49 is a 90-day notice. If landlords wait until the new CPI numbers come out in late September, the earliest the rent increase would go into effect 90 days hence, so essentially January, 2024. Here are two examples:

  • Assume I issue a 90-day notice on September 1. I am using the current MHCO Form 49 which uses the 10% cap (since SB 611 became effective July 6, 2023) because the CPI was 7.6%, and CPI + 7% = 14.6%. The earliest my rent increase could go into effect is December 1 (assuming manual delivery).
  • Assume I issue a 90-day notice on October 1. I would be using an UPDATED Form 49 which would use the post-Sept. 30 CPI number to calculate the maximum cap. That cap will be between 7% and 10% depending on the September 30 numbers. The earliest my rent increase would go into effect is December 30 (assuming manual delivery)

 

[1] Note: Form 49 (and the ORLTA) specify a 90-day minimum, not a maximum. You can give as much additional notice as you want. You can issue a notice now that increases rent on Jan 1, or you can wait until the new CPI numbers come out and issue a notice 90-day notice for January 2024. Just don’t forget that the 10% cap has applied since July 6, 2023.