How is "fair market rent" determined?

Fair market rent is determined based on the rent amounts of comparable properties in the same area. This approach involves analyzing rental prices of similar properties that have recently been leased or are currently available for rent. By looking at comparable properties, landlords and tenants can arrive at a price that reflects the local market conditions, ensuring that the rent asked is reasonable and competitive.

Determining fair market rent through comparable properties allows for a more accurate understanding of what tenants are willing to pay, as well as what landlords can reasonably expect to receive. This method is more reflective of the actual market and helps prevent situations where rents are set arbitrarily or are out of touch with local demand.

The other methods mentioned, such as government assessments or tenant ability to pay, do not provide an accurate basis for establishing fair market rent. Government assessments can vary widely and might not reflect current market conditions. Rents set according to a tenant's ability to pay do not take into account the broader market and can lead to discrepancies. Lastly, fixed price schedules established by the state may not adequately represent the local rental situation and can also lead to misalignment with actual market trends.