How to Raise the Rent in 4 Easy Steps [Free Template]

Written on March 9, 2015 by , updated on April 27, 2017

Raising the RentRaising the rent on your tenants can be almost as difficult as asking your boss for a raise.

The difference is that you typically need to justify your reasoning to your boss, but you don’t need to do so with your tenants, even if you have plenty of valid reasons. such as:

  • Increasing insurance premiums
  • Increases in taxes
  • Maintenance fees that go up
  • Rising homeowner association dues
  • and, there’s always cost-of-living increases

You don’t need to explain your finances to your tenants. All you need to do is let them know in writing that there will be a rent increase and what it will be.

It’s understandable that you might be hesitant the first time you’re preparing to present a tenant with a rent increase. You might be afraid to rock the boat, worried that your tenant will be so offended or mad that he or she might leave. Or perhaps, you fear a confrontation and subsequent retaliatory property damage.

If you follow these four tips, you can eliminate most of the angst from raising the rent, and you’ll begin to think of this process as just another normal part of being a landlord.

1. Automatically include a small rent increase at each lease renewal period

Most tenants expect a slight rent increase at renewal time of say $20-50 or so. But if you spring a $200 or more increase on them after not having increased the rent for five years, you’ll likely get some negative feedback. A good rule of thumb is to raise the rent about 3-5 percent a year.

If you have an excellent tenant that you are trying to convince to renew, you might want to waive the rent increase if they will sign for another year. After all, you can always make up the difference by raising the rent when he/she finally moves out.

An excellent tenant is worth far more than any rent increase.

Related: Tip #8, Don’t Always Raise the Rent

2. Send notice 60 days before lease end

Sending a rent increase letter this far in advance lets you know what the tenant’s intentions are. If he or she doesn’t plan to renew the lease, you have time to start marketing and showing the place without having a vacancy period.

In the rent increase letter, which you can send through regular mail or email, thank your them for being such great tenants. Compliment them on their good traits, such as paying the rent on time or taking care of the property.

Then, get right to it and say that you need to raise the rent. You can add an explanation if you like, such as you needing to keep up with your expenses. Point out that you are raising the rent as little as possible, and that you hope they will stay with you.

You’ll need to state what the new rent will be and the date it becomes effective, which would be the day after the lease ends.

If you have a fixed-term lease, you could include or attach a new lease with your letter or email. Ask that your tenant read the new lease, sign it and send it back to you. Explain that you’ve highlighted or underlined any changes, such as the rent increase, and that everything else remains the same.

If you have a month-to-month lease, the tenant won’t need to sign a renewal since it automatically renews every month.

Sample Rent Increase Letter

3. Know the law

Although the property is yours, you can’t raise the rent however much you like if your place is rent controlled, or if there is a statute that limits the increase amount. And you can’t raise the rent whenever you like if you have a fixed-term lease.

If your tenant signed a lease, you can’t raise the rent until the lease period is up. The only exception is if the lease states that you can raise the rent during the lease period – but even so, it negates the idea of a “fixed” lease and is often not allowable in court.

If your tenant is on a month-to-month tenancy, you can raise the rent after giving the proper notice for your state, which is usually 30 days, but varies by state. Your notice needs to be in writing (letter or email), and unfortunately, any verbal agreement with your tenant usually won’t stand up in court if argued.

Learn more about your state laws, click on your state: 

 

Please know that you can’t raise the rent in a discriminatory manner because you don’t like a person’s race, religion or sexual orientation. Neither can you raise the rent because you just made some needed repairs to the property or to punish a tenant for complaining to the city about a code violation.

In many states, if a tenant as filed an official complaint to a government authority, been involved in a tenant’s organization, or exercised a legal right, then you are restricted from raising the rent for a set period of time. Many courts will assume “retaliation” by the landlord if negative action is taken on the tenant anywhere from 60 – 180 days after any of the prior tenant actions. Again, check your state laws regarding the rules on retaliation.

Related: Ask Lucas 002: How Much Can I Raise the Rent?

4. Know the market rates

Your costs don’t dictate what you should charge for rent; the market does. You can’t expect to keep a tenant if you’re charging significantly more that other similar rental units around you.

But as long as your rental rates are in line with other similar rentals in the area, you follow the rent increase laws of your jurisdiction and you tactfully and professionally give your tenants a rent increase notice, you’ll wonder why you ever stressed about this process.

Actual Rent Comps

The absolute best way to determine market rate is by looking at ACTUAL rent prices of comparables in your area. Using actual “rent data” is better than “listing price” data because one is actual, and the other is projected.

To get actual rent prices, use a Cozy Rent Estimate, which uses a variety of sources to give you the most accurate rent estimate you can find.

Listings Comps

There are still some other great sources of data, albeit, they use listings information. None-the-less, check Craigslist, Zillow, and Rentometer to determine comparables and your realistic market price.

Bonus: Collect your rent online

You can save a little money — and a lot of time — by collecting rent online using Cozy. It’s easier for you and your tenants, and completely free. While you can sign up and start collecting rent using Cozy at any time (even if you’re in the middle of a lease), if you’re updating your lease anyway, it’s a great opportunity make it your preferred payment method.

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Topics:
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57 CommentsLeave a Comment

  • Anna

    If I give a 60 day notice can rent increase be 15% ?

    Thank you.

  • sharon r bower

    Is a text message in place of email, ok?

    • Lucas Hall

      Hi Sharon,

      It would depend on if your state has a law about the notification of rent increases. I’ve certainly negotiated rent increases via email, but I I’m not sure if a judge would accept text messages since you wouldn’t have any real proof that it was received (unless they replied, I guess)

    • Linda

      Can you please advise me on my issue. I was brought from (1) city to where I live now to manage an apt complex. About a year after he had to sell a different house he planned to move to so he remained living here. He then made himself the manager and me the asst. manager. I still paid no rent. Appx. (7) mo ago I started to pay $450 rent a month at his request. Then on 9-1-16 he leaves a short note on my door telling me that I have (3) days to start paying $700 a month. I am disabled ADA, and living on $800 a month. So I didn’t pay anything. I received a (3) day notice dated 11-8-16. Can he do this? I live in Ca.

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  • Vlad

    Tx, so if I give 60 days notice (let say of 1/1/2016), by what date tenant need to get back with Yes/No? If he says No in 30 days (2/2/2016) is this automatically says that he need move out in another 30 days?

    • Laura Agadoni

      Hi Vlad,
      You can tell your tenant that you would like an answer as soon as possible but that if you don’t hear back by 30 days before the lease ends, you’ll start showing the place. That way, you are in control. If the tenant tells you they want to stay, have them sign a new lease with the new amount. If they won’t sign a new lease, show the place. If they choose to stay but on a month-to-month and you agree, you can raise the rent when the lease ends. But if you prefer having a tenant with a year’s lease, your tenant would need to leave when the lease ends if they won’t sign a new lease. If they say no to the rent increase, they need to leave when the lease ends.

  • Barbara Rascoe

    My tenant started dismanteling cars in the back yard to sell on line. I put a stop to that. Now the yard behind the garage is full of hoods etc. The once nice lawn is patchy with grease stains and no grass where the car stood. The lawn in the front yard is rutted from cars going to the back. What expectations can I rightly have to get my lawn nice again.Can my expectations be to high. BTW tenant demands 48 hrs notice for me to enter any part of the primises and has told me to stop driving down the street in front of her house.

  • Laura Agadoni

    Hi Barbara,
    Lawn care depends on your lease. You might be able to deduct damages to your lawn from the security deposit. Best to check with an attorney on that. Many landlords, to avoid having a ruined lawn, hire a lawn care service and add that expense to the rent. This needs to happen before the tenant signs the lease. If you don’t do that, you are responsible for driving by your house whenever you like to check the appearance of the lawn. Your tenant cannot prevent you from driving down a public street! Someone has to care for your lawn: your tenant, you, or a service. How much notice you need to give your tenant before entering depends on the laws of your jurisdiction. The tenant cannot declare this. You are still the owner.

  • Hong

    Hi everyone,
    I’m a new landlord and have a question for you.
    I live in CT, can I increase rent above 12% with a less 60 days ahead written notice? Thanks in advance.
    Hong

    • Laura Agadoni

      Hi Hong,
      When the lease is up, or if your tenant is on a month-to-month, you can increase the rent as much as you like. Restrictions apply only to rent-controlled jurisdictions. 60 days was just a suggestion. Many tenants would not agree to a large rent increase, and by letting them know 60 days in advance, it gives both you and your tenant some time, time for the tenant to decide whether they’d rather pay the increase or move and time for you to find a new tenant if they decide to move.

  • R_Me

    Hello,

    If the rent raise notice is sent within 5 days of the start of a month (feb.) is it required for the next month to start exactly thirty days after delivery, or can the next month rent still be due on the first of the following month?

    If rent is due exactly thirty days, how can I move the rent due day back to the start of the month?

    Secondly, what is a standard (normal) percent to raise the rent in a non-rent-control city in L.A. county.

    Thank you for your work.

    • Laura Agadoni

      Hi R_Me,
      You can always have your rent due on the 1st the month, no matter when you send the rent increase notice. So, for example, if you give a 30-day notice, but you send it 35 days before instead of 30, you would still let your tenant know the date the rent increase becomes effective. You can always give more notice than 30 days notice, but you can’t give less.

      Regarding how much, that’s up to you. Check to see what similar units rent for in your area. Consider whether you want the tenants to stay as well.

  • Buckeye Guy

    Were renting the extra bedroom of the home we live in to a tenant. We have a month-to-month lease with no end date and the tenant does pay rent on time monthly. Due to continuing arguments between the tenant, myself and my wife we would like to end his tenancy all together. Can we evict him even though he has not broken the lease? We reside in Ohio.
    Please help!!!
    We want our house to ourselves again!

    • Laura Agadoni

      Hi Buckeye,
      If your tenant is renting on a month-to-month basis, you just need to give him a 30-day notice to leave. You don’t need to give a reason. Check Ohio law to determine whether he’s considered a lodger or tenant. Many states consider a person renting a room, as long as they are the only renter, to be a lodger. If he doesn’t leave by the date you’ve given and he’s a lodger, you can call the police to remove him as a trespasser. If he’s considered a tenant, you would need to go through eviction if he doesn’t leave.

  • Carolyn Roux

    I own 4 small offices and two are currently empty. I put renting them in a realtors hands. She informed me that my rents were low. An office I rented for $400.00/mo. She states should be 550.00. The tenant in the largest office has been paying $500.00 for about 8 years with no increase. Heat and electric are included, I want to raise the rent to $600.00/mo starting June first. I will be sending him the letter shortly. What do you think? Thank you.

    • Laura Agadoni

      Hi Carolyn,
      Check what the rents are for similar units in your area. If what you propose is a good or comparable deal, you should be fine. If you are pricing higher than other nearby office spaces, your tenant might not renew. Your tenant probably knows they were lucky by not having rent increases for 8 years! Another option is if your tenant says they’ll move out with that rent increase, you might want to negotiate if you don’t want to lose your tenant. Good luck!

  • lotttie

    I want to raised the rent up I liked to know how do go by doing so I live Illinois .

  • Julie

    Hello Laura.

    My wife and I just bought a three apartment ranch style building in Illinois.
    I want to raise the rent by ten percent on only one of my tenants.
    Can I do that?
    Or do I need to raise the rent on all of my tenets?

    • Lucas Hall

      Hi Julie

      As long as they have separate leases, you can treat them differently since they all have different agreements. But to be sure that they don’t take it as “discrimination” it might be wise to raise the rent for everyone.

      I hope that helps, please know that I’m not a lawyer.

  • Thabo

    Hi Julie

    I am a landlord and my tenants do have a lease agreement with me(even though I gave them one and they did not sign it). Can I increase rent before the full twelve months finishes?

    • Laura Agadoni

      Hi Thabo,
      Of course, it’s always best to get the lease signed. However, if you both have been living under the lease terms, the lease is probably enforceable. I’m not a lawyer. This is just a generality. So if you expect your tenants to abide by the lease, you must also, which means you can’t change its terms until it expires.

  • Tom MAZOLEWSKI

    Nevada requires a 45 day notice for rent increases. On a month to month rental can the notice be effective on a pro-rated basis or do you have to wait until the next full month? For example, if I sent notices out on the first of the month can I charge the first half of the next month at the old rate and the second half at the new rate or do I need to wait until the next month to charge the full increase ? Thanks

  • George

    In California, and my tenants condo lease just expired. I sent a letter with 30 days notice of a 10.5% increase to continue on a to month.
    She claims I have to give 60 days notice for over 10%. Is that true??
    Thanks.

    • Laura Agadoni

      Hi George, Your tenant is correct. In California: “Rent Increase Notice: 30 days if rent increase is less than 10 percent of the lowest amount of rent charged during the last 12 months. 60 days if rent increase is more than 10 percent of the lowest amount of rent charged during the last 12 months. (Civ. Code §§ 827(b)(2-3))”

  • mark Smith

    I received a rate increase by landlord on the fifth but it was postmarked first? Does rate increase start thirty days from when I receive or when postmarked?

  • MAN2016-Me

    Our tenant is under section 8 housing. We have not raised the rent since we started renting out our town home 7 years ago. Our costs have significantly gone up and we currently starting to lose money on our town home. Comparable rents are significantly higher. Our tenant is currently on a month to month lease. As I am sure you already know, Section 8 housing works toward regulating the amount of how much you can charge for rent. Years back it was OK but now it does not make sense financially for us. We believe that a section 8 tenant may be a better tenant since there is more of an incentive for them to take care of the place. Do you know what recourse we may have with section 8 in respect to rents not allowed to go up fairly ?

    • Laura Agadoni

      Hi MAN2016-Me,
      Call your local housing authority. Section 8 allows you to charge what comparable units in the area charge. You need someone to come out and evaluate your situation.

  • TPalmer

    My tenant consistently breaches our rental agreement. Recently I saw her advertise one of the rooms for rent and when I inquired about it, I was told her boyfriend, (who had moved in without my knowledge) had left and she was renting out a room to help with expenses. When I approached her about the situation she said her boyfriend had moved back in and I need to write up a new rent agreement to include him. I don’t want her subletting rooms and apparently if he moves out again she will again be advertising for another roommate. In the meantime, how do you think I should address her boyfriend living there? I am not inclined to write up a new lease, she has lived there for over a year and is now on month to month status.

    • Laura Agadoni

      Hi TPalmer,
      You would probably be better off giving her notice to vacate. If you have a difficult place to rent, which is the reason you don’t want to do that, let her know that she can sublet only with your approval.

  • tabt

    I have attended that have broke the contract of their mowing yard I’m fixing to make them sign a lease they are now doing it month to monthI have went up on the rent $100.because I have to hire someone to mow their grass

  • Elizabeth

    Hello was wondering if the tenant pays 1,000 a month and you want to increase the rent to 1,300 is that to high of increase in rent? Is that exceeding the max percent? This is a property locate in Oakland, CA

  • Elizabeth

    Hello was wondering if the tenant pays 1,000 a month and you want to increase the rent to 1,300 is that to high of increase in rent? Is that exceeding the max percent? What is the max percent?This is a property locate in Oakland, CA

  • Sherry Post

    I’ve rented a spare room in my home. I am the primary tenant. I live in California. The Sub tenants are running my electric/gas bill sky high. I rented on a verbal month to month basis. They have been here a year and a half and it has been literal he’ll but they want to drag their feet through court and cost me a ton of money. I am on a fixed income and they know it. They are trying to take over my home, changing wiring and trying to take over utilities. I need to raid the rent to cover the gas/electric but they are going to refuse to pay. What do I do if I mail them a letter asking for the rent increase and they refuse to pay? I don’t have the money to fight them in court and they know this. But I am literally starving slowly to death pay

    • Lucas Hall

      Hi Sherry

      Sorry to hear about the bad tenant. If they are on a month-to-month tenant, then you can change the agreement with short notice.

      You could raise the rent or even change it so they are responsible for utilities. Whatever you do, PUT IT IN WRITING! If they don’t pay the increase or utilities, then you could terminate the lease. If they don’t leave, then you’d have to take them to eviction court, and then you could take them to small claims later to recoup your damages.

      Try searching this site for “evictions” or ” cash for keys”

  • wilson

    Hello, my tenant pay every month the rent 10 days late, also i have tried in many different ways to contact them they look the window but don’t open the door.
    what should i do?

  • RYAN

    Hello, the original lease was signed by three people. This past summer, one tenant moved out and the remaining two are on a month-to-month lease (as stated in the original lease contract).

    Due to an increase in Property Tax and an expiring ARM, I am looking at increasing their rent by $200 (approx 8.3%). The City of San Jose states I can only raise rent by 5%.

    If they sign a new lease (with just the two of them), can I legally raise it by 8.3 percent?

  • Molly Green

    California – I am renting out a condo with an HOA.

    What are the laws regarding personal injury in the unit by a tenant or tenant guest? Should there be some reference in the lease?

    Thank you, Molly

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