Raising rent periodically is a near certainty in any tenancy, but when done methodically and thoughtfully, it doesn’t have to be stressful or mean losing great tenants.
Here’s how:
Know when and how to raise rent
Typically, rent is raised at the end of a lease, unless the lease agreement has a clause allowing for mid-term increases. It’s wise to take regular stock of the legality of your lease agreements – now might be a good time to check for any local rent control laws, which may limit how much or how often you can increase rent.
Make modest, predictable increases
Smaller, annual rent increases are often much easier for tenants to absorb and manage than unexpected or large hikes. Instead of increasing rent by, say, 10% in one go, consider 2% or 3% per year.
Tenants who feel their rent is gradually and fairly increasing in line with the rising cost of living are less likely to be sticker-shocked into moving to a more affordable option.
Keep an eye on market conditions
It’s important to stay aware of local market conditions to keep your asking rents competitive yet affordable.
Regularly compare your rates with nearby properties to make sure you’re neither undercharging nor pricing out the majority of tenants.
A quick scan of rental listing sites (or local market comparisons in modern PropTech platforms) will show you what’s reasonable. Remember tenants have access to the same listings, so be sure to keep your rent increases in line with the market for higher tenant retention rates.
Notify tenants
Most jurisdictions require property managers to give tenants 30, 60, or even 90 days written notice before a rent increase (an oral notice isn’t legally binding in most states). This is generally to allow tenants time to prepare for the change.
Even in areas with flexible notice requirements, giving a minimum 30-day heads-up is common industry practice that helps maintain a positive, trusting relationship with tenants.
If a substantial increase is necessary, or you are raising the rent for the first time, consider giving tenants a courtesy phone call to explain the increase and give them the opportunity to ask questions.
Add value with property updates
Improvements like replacing outdated appliances or repainting the property’s exterior can be strategically timed with any rent increases to remind tenants of the value they’re getting renting through you, which can help make reasonable increases feel even more justified.
By making the rental unit more attractive or functional, you’re providing tenants with a tangible benefit, making it easier for them to accept the higher rate.
Strike the right balance
Raising rent doesn't have to jeopardize tenant happiness or cause work stress – with reasonable increases, transparent communication, and ongoing property care, assisted by modern technology platforms, you can maintain both good business health and great tenant relationships.
