Can I create a two-year lease and include a clause requiring the tenant to pay a 5% rent increase each year?
March 18, 2025
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In Massachusetts, landlords have significant freedom to structure rental agreements, but they must comply with Massachusetts landlord-tenant laws under M.G.L. Chapter 186 and M.G.L. Chapter 239.
Two-Year Lease with 5% Rent Increase:
- You can create a two-year lease that includes a 5% annual rent increase.
- Massachusetts law does not limit rent increases in private rental agreements as long as the tenant agrees to the terms.
- The rent increase clause should be clearly stated in the contract to avoid disputes.
- Specify the exact rent for year one and year two, ensuring transparency.
- The contract should confirm that the increase is fixed (5%) and not subject to arbitrary adjustment.
Security Deposit Regulations (M.G.L. Chapter 186, Section 15B):
- The security deposit must not exceed one month’s rent.
- It must be held in a separate, interest-bearing account in a Massachusetts bank.
- The landlord must provide written notice to the tenant within 30 days, including:
- The bank name, address, and account number
- The amount deposited
The landlord must pay annual interest to the tenant at a rate set by the bank or 5%, whichever is lower.
The deposit must be returned within 30 days of lease termination, minus lawful deductions for damages.
Failure to comply can result in triple damages, attorney’s fees, and court costs if a tenant sues.
Local Tenant Protections & Rent Control Considerations:
While Massachusetts does not have statewide rent control, certain cities (Boston, Cambridge, and Somerville) have tenant protections that require proper notice for rent increases.
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Can I create a two-year lease and include a clause requiring the tenant to pay a 5% rent increase each year?
I understand you’re looking for assistance with your rental agreement in Massachusetts. Are there any specific concerns you have regarding the terms?
Can I create a two-year lease and include a clause requiring the tenant to pay a 5% rent increase each year? Security deposit—we need to keep it in a common account?
Have you already drafted the two-year lease with the 5% rent increase clause, or are you seeking guidance on how to proceed with that?
I am seeking guidance.
Is there anything else the Landlord-Tenant Lawyer should know before I connect you? Rest assured, they’ll be able to help with your lease agreement and rent increase clause.
That’s it.
Good afternoon. Please give me a moment to review your question.
Just so you are aware, I do not provide representation, and no attorney-client relationship is formed. My answers and comments should not be considered legal advice. It is always best to hire a local attorney to review the specifics of your particular case to ensure that a proper review is conducted.
In Massachusetts, landlords have significant freedom to structure rental agreements, but they must comply with Massachusetts landlord-tenant laws under M.G.L. Chapter 186 and M.G.L. Chapter 239.
Two-Year Lease with 5% Rent Increase:
- You can create a two-year lease that includes a 5% annual rent increase.
- Massachusetts law does not limit rent increases in private rental agreements as long as the tenant agrees to the terms.
- The rent increase clause should be clearly stated in the contract to avoid disputes.
- Specify the exact rent for year one and year two, ensuring transparency.
- The contract should confirm that the increase is fixed (5%) and not subject to arbitrary adjustment.
Security Deposit Regulations (M.G.L. Chapter 186, Section 15B):
- The security deposit must not exceed one month’s rent.
- It must be held in a separate, interest-bearing account in a Massachusetts bank.
- The landlord must provide written notice to the tenant within 30 days, including:
- The bank name, address, and account number
- The amount deposited
The landlord must pay annual interest to the tenant at a rate set by the bank or 5%, whichever is lower.
The deposit must be returned within 30 days of lease termination, minus lawful deductions for damages.
Failure to comply can result in triple damages, attorney’s fees, and court costs if a tenant sues.
Local Tenant Protections & Rent Control Considerations:
While Massachusetts does not have statewide rent control, certain cities (Boston, Cambridge, and Somerville) have tenant protections that require proper notice for rent increases.
Yes, that makes complete sense. Thank you for your prompt and detailed response.
Regarding the security deposit bank account details—does that mean I need to provide my account and routing numbers to the tenant?
Also, can I include any move-in costs for the tenant in the rental agreement?
Yes, under Massachusetts law (M.G.L. Chapter 186, Section 15B):
Landlords must provide tenants with written notice within 30 days of receiving the security deposit.
The notice must include:
- Bank name & address
- Account number
- Amount deposited in the interest-bearing account
Move-In Costs That Can Be Included in the Lease:
- First and last month’s rent
- Security deposit (up to one month’s rent)
- Lock/key fee
Prohibited Fees:
- Non-refundable fees such as application fees or cleaning fees are not allowed.
- Ensure all move-in costs are clearly outlined in the lease agreement so tenants understand their financial obligations upfront.
This is very informative. Thank you.
And you’re very welcome.
