What is a rental cap?

A rental cap is a limit or maximum restriction on the amount of rent that can be charged for a rental property. It's typically imposed by a landlord, property owner, or a governing body such as a city or state government. It’s designed to protect tenants from excessive rent increases and to ensure that housing remains affordable.

Rental cap can be set either as a percentage increase or as a fixed amount. For instance, a 5% rent increase cap means that the landlord can't raise the rent by more than 5%. In some cases, the cap may be adjusted annually based on inflation or other economic factors.

Rental caps are a controversial topic among landlords and tenants. While it is good news for renters because it helps keep their rent fees stable and prevents them from paying more than they can afford, landlords may see this as a threat to their income and their ability to cover their expenses caused by inflation, maintenance, taxes, and other fees.

Overall, rental caps can be an important tool in maintaining stable housing affordability, although their effectiveness can vary depending on the specific market conditions and the regulatory framework in place.