Rent increases are a part of life for rental property owners and their tenants. While it will never be considered a favorite part of the landlord/tenant relationship, attention to the following do’s can make the process less painful for all involved. The key is to consider several factors before getting to the “rent increase letter.” 

The first step when contemplating a rent increase is to do your homework.  

1. Check state laws for limits on how often/how much you can increase the rent. With more states considering rent increase legislation, be diligent about staying abreast of changes that will impact your business.  

2. Investigate the local rental market. Is there room to increase the rent and still be on target for the local market? Be aware that raising rent costs above the area rates will often result in tenants moving out. And we all know how costly turnover can be! 

3. Industry advice suggests a rent increase of no more than 3-5% per year is acceptable. However, if the market analysis supports an increase of more, then consider doing a stepped increase over the course of the renewal term to help alleviate the immediate budget shock for the tenant.  

4. Remember, unless the lease specifies otherwise, landlords can only increase the rent when the lease expires. 

If and when the above “homework” confirms a rent increase decision, it’s on to the notice.  

Aim to be Professional and Friendly 

Begin the letter by addressing the tenant by name. Include the date of the notice, the property address, the current rent rate, the date the new rate will be effective, and of course, the new rent amount. That’s the professional part. 

In a transparent, personable tone, offer a brief, pleasant explanation. Cite reasons for the rent increase—increased utility costs, improvements, higher property tax or insurance, etc.   

Make Yourself Accessible  

Throughout the short correspondence, extend an invitation for tenants to reach out to you with questions and comments. Include all forms of contact information to remind them of the various ways to reach you.  

Close with a Personal Touch  

Include appreciation for them as tenants and a desire to continue the arrangement. Conclude with an appropriate “complimentary close”—Best wishes, Sincerely, All the best. 

Consider the Best Option for Serving the Letter  

Again, check the legalities that apply in your state for delivery options and advanced-notice requirements—typically, it’s 30 days, but some locales require 60 days or more. The most common service options include:  

• Certified mail 
• Hand delivery 
• Posting the notice on the front door 
• Regular mail 

Remember: Letters delivered via certified mail will provide you with a receipt to prove delivery, and “snail” mail takes time, so plan accordingly. 

With a bit of effort and consideration from the landlord, the rent increase letter can play a positive role in the landlord/tenant relationship.   

About Rentals America   

Rentals America provides full-service property management for residential rental properties. Our team is completely dedicated to property management and we’re here to help landlords navigate the rental market.