Rent increases can be one of the most sensitive topics related to property management. After all, no resident wants their monthly rent bill to get more expensive. Still, increases do need to happen sometimes, so how should you handle them? Below, we’ll answer some common questions about rent increases.
If I want to increase the rent, how should I go about it?
Before you increase the rent, you should notify your residents in writing well in advance. This message is known as a rent increase letter, and exactly how far in advance you need to send it varies by jurisdiction. When you do send it, make sure to send one for each unit for which the rent is increasing, and make sure they include information like the date the letter is written, the date the increased rent will take effect, the new rent amount, and your contact information.
Why is a rent increase letter important?
Notifying residents of a rent increase is generally legally required, and you’ll definitely want to do so in writing. If you don’t have documentation proving that you notified residents about increasing rent, you may end up in legal trouble. Make sure to also retain a copy of the letter and proof that you sent it.
A rent increase letter also makes things easier for residents, because it spells out the exact amount they’ll need to pay in a form they can view at any time. If you only tell someone about a rent increase in person or over the phone, they won’t have the details handy if they need to reference them later.
OK, so I’m legally required to notify residents about a rent increase. Do I have any other legal responsibilities related to increasing rent?
Probably. Again, the exact rules governing rent increases vary by jurisdiction, so you’ll need to check local laws to know for sure exactly what you can and can’t do. Many places have rules regarding how often you can increase rent, how much you can increase it by, and how much notice you need to provide. Rules for month-to-month leases are usually different from longer-term leases as well. Make sure to find out from local authorities what rules apply to you.
Besides the legal requirements, is there anything else I should take into consideration before increasing rent?
Even in situations where you’re legally allowed to increase rent charges, it’s not always a good idea. You should avoid charging more than comparable properties in your area. If you charge a lot more than others for similar units, you’ll likely cost yourself residents, and you risk backlash. Be careful to check rent at other nearby properties to get a sense of what’s considered reasonable.
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