After you’ve renovated your property and included a few amenities, it’s time to start reaping the fruits of your labor and boost your rental income. If your property is currently vacant, you can list it with a new rental price. What if your existing lease is expiring? This is also a good time to increase rent. However, how much you can increase rent will depend on local landlord-tenant laws. Plus, there may be requirements for advance notice as well. In any case, best practices require you to deliver a rent increase notice.
In this article, we discuss when landlords can increase rent, whether there are limits to how much you can increase rent, and how much notice must be given to the tenant (though these vary by city and state). Lastly, we also shed light on how to write a rent increase letter and where landlords can download a notice to increase rent template.
Note: This is the 8th in our series exploring the best ways to increase rent. You can read our other installments here:
- Part 1: 6 Rental Property Renovations That Will Boost Your Income
- Part 2: Collect Fees for Pets in Rental Property
- Part 3: Furnished Rental Apartments
- Part 4: Submetering Water and Electricity Utilities vs RUBS
- Part 5: Additional Sources of Rental Income
- Part 6: Top 8 Apartment Amenities Renters Want
- Part 7: Tips to Make Your Rental Listing Stand Out
What is a Rent Increase Notice?
A rent increase notice is a letter provided by the landlord informing a tenant that the rent in the tenant’s unit will be raised. You can use this letter to notify your intent to raise the rent upon the expiration of an existing lease agreement, (or with proper advance notice) for a month-to-month rental agreement. For tenants, this letter notifies them how much their rent will increase and when the changes take effect, giving them time to prepare for and comply with the increase.
Landlords must give notice to the tenant in writing delivered personally or by first class or certified mail, depending on local laws. Not all states allow rent increase notifications by email. It’s convenient, but also harder to track if the tenant received it. After the notice is received by the tenant, they will have the option to either accept or reject the rent increase.
When Can I Increase Rent?
You can usually increase the rent when a fixed-term lease comes to end, unless the terms and conditions of the lease allow a landlord to increase the rent in the middle of the lease.
For month-to-month, you can increase rent at the start of a new rental period. However, you need to give a proper rent increase notice, usually at least 30 days. This period typically depends on local laws and regulations, so make sure you check first.
What is the Required Notice Period?
The length of the notice period you must give renters before increasing the rent depends on your local laws. Many states require a 60-day notice if you have tenants-at-will. A tenancy at will is a tenancy without a predetermined duration for the tenancy, often without a written agreement. Either landlord or tenant can terminate this tenancy at any time.
Month-to-month leases typically require a 30-day notice, and a long-term lease needs 30 to 60 days of notice period before the lease expires. Some places, such as California, stipulate 30 days if the rent increase is 10% or less and 90 days if more than 10%. And in Seattle, new rules require a minimum of 180 days prior to the rent increase, no matter how much the increase is. Plus, increases can only begin at the start of a rental period.
How Much Can I Increase Rent?
Before you write a rent increase letter, you need to know how much you can increase rent. The simplest way to calculate the amount is to use these best rental estimates. These estimates will help you make an informed decision about pricing.
The next step is to conduct your own market research via platforms like Craigslist, Zillow, etc. See what other landlords are charging for similar properties in the neighborhood. Also, check out our rental property calculators to determine ROI and other metrics resulting from a rent increase.
Some places have rent control and limit the amount you are allowed to increase rent. Sometimes this amount is tied to inflation. As of 2022, rent control regulations exist in just five states, including New York, New Jersey, California, Oregon, and Maryland. However, according to The Wall Street Journal, regulations are being proposed throughout the country that would allow landlords to increase monthly rents by no more than 2% to 10%.
Additionally, in some places, if the increase is over a certain threshold for low-income tenants, landlords may have to pay relocation assistance (called Economic Displacement Relocation Assistance) if the tenant decides to move out. For instance, Seattle requires landlords who raise rents and fees by 10% or more within the same 12-month period to pay certain tenants who move out after the increase.
It’s also important to note that most states prohibit raising the rent to retaliate or discriminate against a tenant. For example, a landlord can’t increase a tenant’s rent because they filed a legal complaint against them for not keeping the property in livable condition.
All this is to say that we advise you to check your local regulations before raising rent to ensure you are in compliance.
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What Should You Include in a Rent Increase Notice?
A rent increase letter typically contains the following details:
- Date of the rent increase notice
- Name and contact information of the landlord and the renter
- Complete address of the property
- The expiration date of the existing rental agreement
- Current rent amount
- Amount of rent increase
- Day from which the increased rent applies
- The due date for accepting the rent increase
- Non-renewal notice period if a renter doesn’t agree to the rent increase
The more thorough and straightforward your rent increase notice is, the easier it is for both parties to understand and come to an agreement.
Where Can I Download a Notice to Increase Rent Template?
ezLandlord Form’s Increase in Rent notice simplifies the rent increase process with this all-in-one form. It’s an editable document that you can auto-fill and customize to create a state-specific rent increase notice. The form also includes two checkboxes at the bottom where the tenant can choose to confirm the rent increase or deny it. Once you have finished creating the letter, the form is ready to be sent to the renter.
You can also buy a state-specific rent increase letter. This editable letter is created by professional lawyers. All you have to do is change it to your preferred offline or online editor, fill it out, sign it, and print it. Just make sure that the document you choose is applicable in the state where you live.
- With a range of free rental applications and lease templates, landlords can easily create legally binding documents in minutes using EZ Landlord Forms.
- Strength: Leases & e-Signing
Rent Increase Notice: Landlord Gurus Takeaway
Over time, costs go up in every business, including the rental property business. Not all landlords look forward to informing renters of an upcoming rent increase. However, to run a business efficiently, a rent increase is sometimes necessary. A properly written rent increase notice helps in making what could be a difficult situation into a straightforward and professional task.
When increasing the rent, every landlord wants to ensure that they comply with state laws. Most states have strict regulations about when to inform a renter of an upcoming rent increase. Notice periods can vary based on how long the lease is, whether it is verbal or written, fixed or periodic. So make sure you follow all rules and regulations for giving your tenants a notice to increase rent.
When presenting the rent increase letter to the tenants, it is wise to make sure everyone received their letter. As mentioned earlier, it’s best to deliver the letter by hand and have the renter sign that they have received it. Alternatively, you may mail the letter via certified mail with a receipt. You can then follow up by email to know whether they received your certified mail. This gives the letter a personal touch.
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