Las Vegas has long been recognized as an affordable place to live when compared to other major cities in the United States. However, inflation and the rising cost of living have forced Las Vegas landlords to increase rent to keep up with expenses. Some lawmakers are concerned about sharply increasing monthly rents and how it might create an unstable rental market in Nevada. A proposed solution is Senate Bill 426.

What is the future of rental rates in Nevada? It is possible that new legislation may put a cap on how much landlords and rental property owners can increase rent. While that may help renters, some landlords are worried it will put them in a tough financial position. Here is what you need to know about the proposed Senate Bill 426.

Does Nevada Have Rent Control Laws?

Currently, the state of Nevada does not have a law that controls how much a landlord can ask for rent. Additionally, no Nevada state law limits how much rent can increase after a lease agreement expires. Landlords do need to provide proper notice to tenants if they plan to increase rental rates.

According to NRS 118A, all notices of increased rent must be in writing and served to the tenant in advance. Here are the required notice timeframes:

• Year-to-Year Rental Agreements: 60-day notice
• Month-to-Month Rental Agreements: 60-day notice
• Week-to-Week Rental Agreements: 30-day notice

What Is Senate Bill 426?

Senate Bill 426 (SB 426), also known as the Neighborhood Stabilization Act, was introduced by Democratic State Senator Pat Spearman on March 27, 2023, and aims to address rent stabilization in the state with these key factors:

• Increases in rent will be tied directly to the cost-of-living set by the Housing Division of the Department of Business and Industry.
• Rent increases will be capped at 5%.
• Nevada landlords cannot increase rent during the first year of tenancy.
• Rent to a new tenant cannot exceed what the landlord could charge the existing tenant based on these rules.
• If there is no existing tenant, rental rates cannot be more than the advertised rate.
• Some exceptions are allowed for landlords in particular circumstances.

Can Landlords Be Exempt from Rent Increase Restrictions?

According to Section 5 of SB 426, Nevada landlords can apply for exemptions with the Housing Division if the rules prevent them from getting a “fair and reasonable rate” for their rental. Also, if the cost of operating the rental property exceeds how much the landlord earns if cost-of-living limits are applied, they may qualify for an exemption.

If SB 426 goes into effect as it is currently written, other ways for landlords to be exempt from the rental increase restrictions include:

• A change in the quality or number of services offered by the landlord.
• A change in the amount of property taxes the landlord owes.
• The landlord does significant repairs to the rental that do not fall under “wear and tear”.

How Is the Cost of Living Determined?

Because SB 426 is linked to the cost of living for any given calendar year, it is crucial to have an accurate number to enforce the rules. The regional cost of living will determine the rent increase amount a landlord is allowed to apply.

Section 3 of SB 426 would require that the Housing Division publish the maximum cost-of-living increase for the year, so it is easily accessible to landlords and the public. That increase must align with the Consumer Price Index (CPI) in the region where the rental property is located.

CPI is a measurement that tracks changes in how much people pay for goods and services over a certain amount of time. That number is then used to measure the overall cost of living, which is the amount a person can expect to pay to live comfortably in a state, city, or other designated region. Under SB 426, rental rate increases must align with the CPI for the region and not exceed 5%.

Would SB 426 Change the Rules of Advance Notice to Increase Rent?

If SB 426 becomes law, Section 8 requires landlords to give a longer notice period to tenants before increasing rent. Rather than a 60-day notice, tenants with a rental agreement that is monthly or yearly must receive written notice of an increase to rent 90 days prior to the new rate going into effect. Additionally, the notice must include:

• The amount the rent will increase by.
• The total amount of the tenant’s new rental payments.
• If the amount exceeds the cost-of-living restrictions, the landlord must include the reasons why they are exempt from the rules.
• The date that the new rental rate goes into effect.

What Are the Consequences for Not Following the Proposed Rent Restriction Rules?

If the Bill is passed and a Nevada landlord does not comply with the requirements, a tenant can legally withhold rent and not have to suffer late fees or other fees connected to not paying rent. The tenant is also allowed to apply for relief with the Nevada courts and recover damages caused by the rent increase. According to Section 6, a tenant can receive an amount for damages and up to three times the monthly rental rate in compensation.

When Will SB 426 Become Law?

Although Senate Bill 426 passed in the Senate Commerce and Labor Committee by five to three, the Bill still needs to pass the Assembly and be signed into law by Governor Joe Lombardo. If the Bill passes, it will go into effect on July 1, 2024.

Making the Most of Your Rental Property Investment

The best ways to get the maximum rent for your rental property and a good return on your investment are to find good tenants, maintain your rental property, and follow landlord-tenant laws. Staying on top of new rules, regulations, and restrictions can help you avoid expensive violations and legal issues when you are caught off guard.

The Henderson and Las Vegas property management team at Black & Cherry can help you stay current with Nevada laws and make changes when necessary. We can also help you find quality tenants, collect monthly rent payments, keep your rental property in good condition, and advertise vacancies, which keeps your rental income steady and profitable. To learn more about our property management services, contact our property management team today!