You may have problems on two fronts. First, because you didn’t sign an agreement, the landlord may not know that you’re living there. If the landlord cares about who lives in the rental, he may consider you an unauthorized occupant if and when he finds out. Most carefully written leases give landlords the right to evict both the original tenant and the unauthorized newcomer.
Assuming that the landlord knows about the situation and is not bothered, the next question is whether the tenant (he’s technically the sublandlord) can raise the rent when there’s only an oral understanding as to the terms of the rental, and whether raising it after two months’ stay is legal.
Oral rental agreements are enforceable for up to one year. Because you’ve been there less than a year, you have a valid agreement, but it’s unfortunate that you didn’t reduce it to a written understanding. The reason is that it’s all too easy to forget, or misconstrue, an oral agreement. People end up arguing about what was agreed to, instead of what should be done now.
The issue you now face is whether your agreement was a lease (which can’t be changed until it runs out), or a month to month rental agreement, which self-renews until either party terminates it or changes its terms upon the required amount of notice (30 days is common). If your sublandlord claims the oral understanding was a month to month deal, you’re out of luck—upon proper notice, the new rent will become effective. But if the understanding was for a lease, the rent can’t be changed until it’s up. You can see where the argument is going—a tug-of-war between the two of you as to what that spoken deal really was.
From a practical point of view, as well as a legal one, you’re in a tight spot. Even if you were to go to court and win (convincing a judge that you have a lease), you hardly want to live with someone who fought you on this level. Maybe the best move is to try to make peace for now and begin looking for a new place to live.