When to write a rent increase letter?
As a property manager or a landlord, you have the option to periodically increase the rent on your properties. Before doing this, it’s imperative that you send a rent increase letter. Landlords must provide a 60-day notice of rent increase to ensure that the tenant knows of this change and can start preparing for it.
You can compose a friendly rent increase letter if:
- You want to inform your tenant of an increase in their rent amount per month.
- You would like to have documentation for notifying your tenant about the increase.
In terms of how much you can increase your rent, you would have to refer to your state and local laws. These laws also inform you how many days notice you must provide to your tenant before you increase the rent. Also, landlords are usually restricted from increasing the rent while there is an existing agreement.
In most states, landlords aren’t allowed to raise the rent without first sending the proper rental increase forms or letters. There are also some states which come with their own requirements regarding the allowable amount. Therefore, you must familiarize yourself with these laws first before composing your rent increase letter.
Why should you increase your tenant’s rent?
As aforementioned, landlords must follow certain rules before raising the rent of tenants, one of which is writing a rent increase notice. Not following these steps might cause issues such as invalidating the rent increase. Here are some of the most common reasons why landlords may choose to increase their tenants’ rents:
- To keep up with the fair market rent
Since you and your tenant first agreed with the terms of your lease agreement, the prices of rent may have gone up in your area. Because of this, even if your tenant doesn’t accept the rent increase you indicate on your rental increase forms, chances are, there will be other prospective tenants who would agree to your price.
- Because of an increase in expenses
One important reason for increasing your tenant’s rent is so that you can keep up with your own bills and expenses. There may have been an increase in your property’s operating expenses like property taxes or higher utility bills. In such cases, the best option is to increase your tenant’s rent as well.
- It’s the legal right of the landlord to increase the rent
Finally, it’s your legal right as a landlord to increase the rent as long as you send a 60-day notice of rent increase and follow all the other legal procedures.
There are also some risks involved when you increase the rent of your tenants. One of the most common risks is that your tenant decides to move out. You may want to consider this, especially if you live in an area where it’s difficult to find good tenants to rent your apartment.
If you had created an agreement with your tenant for a fixed term, then the rent price on that existing lease remains valid until the lease expires. If you want to increase your tenant’s rent, you have to wait until the lease term ends. Before that, make sure to send a friendly rent increase letter to inform your tenant of your plans.
Tips for writing a rent increase letter
For some landlords, one of the most dreaded documents to create is a rent increase letter. The relationship between a landlord and a tenant is a very delicate one. As a landlord, when you send this type of correspondence, make sure to do it correctly. Otherwise, you might risk compromising your relationship with your tenants.
To help you, here are some tips for writing a rent increase notice:
- Communicate your message effectively
If you want your tenant to have a positive reaction to your letter, make sure to communicate your message openly and effectively. Increasing the rent is an inevitable thing but it may be an issue for some people. Therefore, you must word your letter carefully to ensure that your message comes across well.
- Don’t forget the person at the receiving end of your letter
As you compose your rental increase forms, you should consider the person who will read the letter. Don’t forget that your tenants are hardworking people who also have their own expenses to keep up with. As long as you remember this, you can maintain a positive empathic tone to avoid offending your tenant.
- State your reasons for increasing the rent
You must never attempt to increase your tenant’s rent before the end of the lease period. That is unless there is a statement in the agreement which indicates that you can do so even while the agreement hasn’t expired yet.
When composing your letter, make sure to indicate your reasons for the rent increase. This makes it clearer to the tenant which, in turn, makes it easier for them to understand your decision. Simply stating that you plan to increase the rent without explanation might not sit well with your tenant.
- Try flattery… it goes a long way!
If the person renting your property has been a model tenant, then you can compliment him for it. State how happy you are to have this person renting your property because he follows all the rules, he always pays rent on time, and so on. Make your tenant feel important and express your appreciation too.
As the saying goes, “a little flattery goes a long way” and this is especially important when you’re trying to break the news of a rent increase or something equally delicate. You don’t have to go overboard, stick with the facts so that your tenant feels how genuine your compliments are.
- Be courteous but professional
Finally, make sure that the tone of your letter is both courteous and professional. Use some friendly statements but don’t be too casual with your approach. Otherwise, your tenant might get the impression that this isn’t a serious matter which you have considered carefully.
When are tenants protected from a rent increase letter?
Landlords can’t just increase the rents of their tenants whenever they feel like it. They should compose and send a friendly rent increase letter to inform the tenant of the increase and other pertinent details about it. Here are some situations when tenants remain protected even after receiving such a letter from their landlords:
- A landlord cannot demand a rent increase when there is an existing lease
As aforementioned, landlords aren’t legally allowed to increase their tenant’s rent unless this provision appears on the existing lease agreement. If not, the landlord must wait for the term to end before increasing the rent.
- A landlord cannot demand a rent increase unless he sent a rent increase letter within the proper number of days
If you want to increase your tenant’s rent, you must send the letter. There is no getting out of this unless you want the rent to remain the same. This letter makes it safer for you and your tenant to continue your relationship, especially if you happen to encounter any conflicts in the future.
- A landlord cannot demand a rent increase without providing adequate written notice
When it comes to the number of days when you should send your letter, refer to the laws of your state and your locale. Usually, the number falls between 30 to 60 days but it’s always better to make sure. Otherwise, your tenant might catch you on a technicality preventing you from increasing the rent for that year.
- A landlord cannot demand a ridiculous amount for the rent increase
You must think carefully about the rent increase you plan to impose on your tenants. Make sure that you set a reasonable amount so you don’t get a lot of resistance from your tenants. You may want to check the competition to determine a fair amount which won’t drive your tenants to look for new properties.
- In some cases, tenants have the options to fight for an illegal rent increase in court
There are special cases when a tenant can bring their case to court like when they feel that the landlord has chosen to increase their rent as an act of discrimination or retaliation. For such cases, the tenant must provide strong evidence to support the case.
- Tenants have the right to reject a landlord’s rent increase
Finally, tenants also have the right to reject the rent increase. But in such a case where the tenant and landlord cannot come to an agreement, the tenant would have to move out. If the tenant chooses to remain in the property while still refusing to pay the increase, the landlord may take legal action.
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