New Affordable Housing Rules Aim to Protect Tenants from Mid-Lease Rent Increase

Industry Insights

Landlords may not increase rents more than once every 12 months for people living in affordable housing projects, according to Minnesota rule that recently took effect.

The change comes after tenants complained their rents rose months after signing a lease. It applies to properties financed with a federal affordable housing tax credit.

Ivory Taylor with Home Line, a group that advocates for tenants, said most complaints came from renters in buildings owned by Dominium, the state's largest for-profit developer of affordable housing.

"Tenants who signed leases at the beginning of their terms expected to have one rent number for their entire 12-months term, and were seeing increases one month, two months, in,” Taylor said.

In a statement, Dominium said that the company has historically determined rent for residents at the same time each year, when the U.S. Department of Housing and Urban Development issues the maximum rent that can be charged for a federally-subsidized housing unit.

Dominium said that for someone who has just signed a lease, this could amount to two increases in the first year renting.

Going forward, Dominium spokesperson Paula Prahl said the company would comply with the new policy.

Taylor says her group also saw mid-year rent increases at one affordable housing building owned by MWF Properties.

A spokesperson for MWF Properties said he was not aware the company raised rent mid-lease, and had lowered rents in some cases.

Those who qualify for affordable housing often have precarious incomes, Taylor said. They find relatively small changes in rent difficult to bear. She said the new rule injects some certainty into the process.

"People have the opportunity to move into a place and know what their rent is for a year and they can plan for and budget around that, and they don't have any surprises in the middle of the year,” she said.

Some people who experienced mid-year rent increases were evicted because they couldn’t pay. Taylor added that others had to take on a new job, or drop other expenses to afford the higher rent.

Click to read in MPR News

Click to read in Star Tribune

Click to read in Minneapolis/St. Paul Business Journal