As a landlord, you have to increase the rent of your tenant at some agreed point. Thinking of this is the easy part but telling your tenant about it is another thing. You might hesitate or stress about the best way to let your tenants know and at the same time, keep it formal for record purpose. To make the impact less painful, you should craft a perfectly professional and friendly rent increase notice.

Rent Increase Notices

How do you tell tenant you are raising the rent?

There are some factors to consider before you raise the rents of your tenants. For instance, in the case of a tenant who pays on time and who doesn’t cause any trouble, there is a risk that you might lose that tenant if they can’t afford the increase.

It is, therefore, important that you have prior knowledge of the rental amounts in your area to make sure that the increase won’t seem too egregious compared to the properties around yours. Before sending a rent increase notice, here are some things to consider:

  • Decide on the amount of the increase
    As a landlord, you will decide on the new rent amount after comparing your rates to the other properties around the area. You should spend time researching the rental rates around. This allows you to make a realistic estimate of what amount to finally decide on.
    Usually, when looking at other rental listings in your area, you would believe that your property’s worth is more than the others. But this isn’t always true. This is why you should try making a well-informed estimate of the rental market with facts as your basis.
  • Review your lease agreement
    If property rentals aren’t paid on a monthly basis, then you cannot increase the rent. Leases usually last for one year and during this time, your tenant pays a fixed amount until the expiration of the lease.
    Even if your arrangement is on a monthly basis, it’s still a requirement for you to read the terms to make sure that you’re allowed to increase the rent
  • Verify the notice period of your state
    You should know the municipal laws in your state that govern rent increases. There are laws that say that you can only raise rents by a specific amount. Otherwise, your only duty is to notify your tenant about the notice period required by the state before the rent increase comes into effect.
  • Compose the notice
    Once you have figured out the amount of the rent increase, you can now compose the rental increase letter then send this through certified mail with a return receipt. This ensures that your tenant receives the official notice. When you get the receipt back from the postal service, you should keep it in your records.
    After receiving the notice, your tenant can make a decision on whether they agree to pay the new amount, they send you a counter-offer or they choose to vacate the property.

Rental Increase Letters

Sending the notice

As a landlord, you should go through the lease agreement with your tenants to see if you have the right to increase the rent. Most probably, if the lease has not yet ended, you might not have the right to do so – you should wait first until the lease agreement expires.

But you can send a letter to your tenant 60 days before the expiry of the lease, notifying them in advance that you plan to raise the rents. After that, it’s the tenant’s prerogative to either move or comply.

You should also consider your relationship with the tenant. If your tenant has paid on-time and isn’t causing any issues, you may choose to waive the rent increase to avoid the trouble of looking for another tenant.

In cases where there is no rent agreement or the agreement has already expired, you should still send a rent increase notice in advance, usually between 30 to 60 days, depending on the local and state laws.

The lease agreement might include information about how you should send to your tenant. For instance, a free residential lease agreement states that notices like the rental increase form must be in writing and must either:

  • Get delivered in person
  • Get sent through a courier service.
  • Get sent through certified mail.
  • Get sent through registered mail

Sending the notice by certified mail is the preferred method because it creates a better record than other methods. If you have been in touch with your tenant through email, another option is to send the letter electronically. But it’s still a good idea to send a hard copy of the notice for good measure.

How do I write a notice of rent increase?

A rent increase notice is a document written by a landlord to a tenant for the purpose of officially notifying the latter about an increase in the rental amount. As the landlord, only you can raise the rent amount if the original agreement permits it and if you give your tenant enough time.

In the case that there is no existing lease or your lease has already expired, you must comply with the local and state laws by giving an appropriate advanced warning. You should see to it that you check the city laws.

The reason for this is that municipalities have rent stabilization or rent control laws that set limits on when and how much you may increase the rent. Most, if not all, the notice of rent increase you compose must contain the following elements:

  • The complete address of the rental property.
  • The current amount of money that your tenant has paid since they started renting the property.
  • The increased amount of money that you want the tenant to pay.
  • The date when your tenant should start paying the increased rent amount.
  • The complete name your tenant.
  • Your complete name as the landlord who owns the rental property.

Rental Increase Forms

What’s the most a landlord can increase rent?

Owning and maintaining a rental property is a business enterprise and to keep up with everything that makes owning the property just a little more expensive, there is a need to marginally increase rents each year. You inform your tenant of this using a rent increase notice.

The most common standard for a rent increase is between 3% to 5%. But there isn’t a standard rule with regards to increasing rents. When deciding how much to raise the rent, you should consider the changes in the prices of market living, as well as, your own expenses.