Yes, it's pretty common for any lease over one year to include an increase. I have seen 2% increases but not 5% in my area. I assume this is something you might be able to negotiate...? Have your Realtor work on it for you!
If you're questioning it, sounds like the 5% is too high. But if you really want the place, try countering the landlord with a better term.
By any chance, will you be paying below market for the 1st year or getting special concessions? You also will want to check your rent control rules for your area.
5% does not seem unreasonable, but it is negotiable...
Think about buying if you can... then you do not have to worry about this.. and with rates as low as 3.85% is a great time to buy!
Ron Escobar, MBA
Real Estate Expert!