Key Takeaways
- The real estate industry’s rules and regulations are often changing.
- It’s important to stay updated on these changes as a landlord.
- Partnering with a property management company can streamline operations and ensure you’re always up to date.
The property investment landscape is always changing, and most of the critical changes in the sector are not the outcome of market forces but rather the result of new legislation by federal, state, or local governments. Investors who want to remain consistently profitable must adapt their investment decisions and the operation of their income properties to these new realities.
In 2025, as in previous years, new regulations have come into effect that impact how investors can approach various aspects of real estate investing. These new laws cover everything from rent increases to security deposits, sustainability, evictions, and more. In this post by Action Properties Inc. , we explain what you need to know to keep your investment properties running smoothly this year.
2025 Regulatory Changes In Property Management
Accuracy In Advertising And Limited Data Collection
New rules require a greater level of accuracy when advertising your property. Landlords cannot embellish the features of their property, but must represent its actual condition honestly through photos and descriptions. In cases where it is deemed necessary, they must disclose the real condition of specific materials. Other new laws focus on how much data you can collect on prospective renters. Only data that is vital for making an informed decision on the tenant is allowed, and this must be accompanied by full disclosure of how the data will be used.
Price Transparency Is Mandatory
Rental ads and offers must show the total price clearly instead of a teaser rent intended to lure tenants. Ads must not only include all mandatory fees and payments, but also display the total price prominently. The goal of these new requirements is to prevent junk fees, an unfair practice used to trap would-be renters. Before asking a prospective renter for their personal information, landlords must provide details of all the fees the tenant must pay before they can take possession.
More Robust Tenant Screening Laws
New guidelines bring a greater level of accuracy, fairness, and transparency to tenant screening. Using proxy third-party screeners and AI tools will not absolve landlords of responsibility if those methods introduce biases that exclude some protected classes. Before using a service for tenant screening , landlords are expected to know how the service works and what it uses. Some jurisdictions have limits on how much you can charge in screening fees and the timing of the disclosure of those fees.
Updated Rent Control Laws
Housing affordability is a major focal point of these new regulations. Instead of being limited to coastal US cities, as was the case in the past, rent control caps are seeing more widespread adoption on statewide levels. In states like Oregon, the allowable rent increase per year is capped at 10% for most properties. In other jurisdictions, caps on rent increases are tied to a formula. The goal is to balance tenant protection with the needs of landlords. In addition to rent increase caps, some cities have limits for late payment fees and when they can be charged.
Tighter Security Deposit Rules
In a few states and cities, you may not charge more than one month’s rent as the security deposit for your rental property. Some jurisdictions require that interest be paid to tenants on security deposits held. If landlords withhold any part of a tenant’s deposit for cleaning, repairs, or other reasons, they must provide photographic evidence to back their claims. Landlords must inform tenants where their security deposits are held and provide the details of the bank account. Additionally, tenants must be informed when their security deposit will be returned.
Improved Tenant Protection Laws
Most states now impose stricter guidelines for evicting a tenant . The procedures often include longer notice periods for lease terminations, up to 90 days in some places. There are significant changes to how tenants’ eviction histories must be handled, with some states moving to seal these records after a set period or following the dismissal of a case. Older eviction records may also not be used as grounds for disqualifying a prospective renter.
Sustainability And Energy Efficiency
Especially for multifamily properties, landlords in some jurisdictions are required to disclose the annual energy usage of their property to would-be tenants. In cities like California, owners of certain types of buildings must implement energy-saving upgrades, like water-efficient plumbing fixtures & appliances, LED lighting, smart thermostats, etc., in their buildings. Other cities and states have introduced energy codes that require rental properties to have an electric-ready design that encourages sustainability and higher rates of energy efficiency. Landlords who meet these new energy standards may be eligible for rebates, tax breaks, and other incentives.
Adapting To These New Regulatory Changes
- Update your lease agreement to reflect the new rules. The specific parts of the agreement that you should pay more attention to include notice periods, disclosures, and rent increases.
- Ensure full disclosure of all applicable fees. If a tenant is required to pay a certain fee before taking possession or to maintain their good standing, make sure they are fully informed.
- If you have properties across multiple states and those states require interest payments on security deposits, you must keep track of interest rates across these jurisdictions.
- To ensure transparency in your handling of security deposits, use a move-in and move-out checklist and keep detailed records with time-stamped photos. Return any unused funds promptly.
- To minimize your legal exposure, update your tenant screening policies and train your staff to follow the new rules. If you use third-party screeners, make sure they have also updated processes.
- To avoid unintentional violations of rent control laws, use a calendar to the acceptable duration for various notices, late fee payment dates, and rent increase periods.
- To build trust with tenants, educate them on the terms of the lease agreement. Communicate clearly, be open to questions, and send timely reminders.
- For your own protection and to ensure greater transparency, make sure to keep detailed records of all communication with tenants, as well as details of financial transactions.
Lastly, working with experienced legal experts and a professional property manager will shield your investments from any risk of infractions against these new regulations. Before hiring a property manager, ensure that they have a full grasp of the issues and that your values align. Contact Action Properties Inc. today to learn more!