A rent increase (rent change) lease addendum is a legally binding contract that modifies the tenant’s rent payments, detailing an increase in the original agreed-upon payments. The landlord attaches a signed copy to the lease, ensuring the terms unrelated to rent payments stay in effect.
Rent Increase Addendum vs. Rent Increase Notice
Explore the key differences between a rent increase addendum and a rent increase notice:
| Difference | Rent Increase Addendum | Rent Increase Notice |
|---|---|---|
| Purpose | • It formally adjusts the rent as part of the lease terms. • It often ensures that the rest of the lease remains unchanged, but it can describe changes in other rent terms. | • It only alerts tenants to an impending rent raise. • Tenants can decide whether to continue the lease under the increased rent. |
| Compliance and Timing | • A landlord and tenant can sign this addendum at any time, usually when both parties agree to update the lease terms or during lease renewal. | • A landlord must issue this notice in compliance with local laws that indicate how much advance notice tenants must get before the landlord implements the increase. |
| Signature Requirements | • It requires the landlord's and tenant's signatures. | • It doesn't require any signatures. |
| Legal Integration | • It becomes a legal addition to a lease once both parties sign it. | • It only informs the tenant of a new rent price that will come into effect at a later date. |
Is It Legal for a Landlord to Raise the Rent?
The legality of raising rent depends on several factors, including the following:
- The reason for the rent increase
- The original terms in the existing lease agreement
- Whether the jurisdiction in which the property resides has rent control laws
If there are rent control laws, the landlord must abide by the legal limits and frequency rates for rent increases.
Please note that the landlord can’t raise the rent for any reason that is retaliatory. For example, they can’t raise the rent in response to a tenant who refuses the landlord’s unlawful demands, joins a tenant association, or exercises their legal rights.
A landlord also can’t increase the rent for any discriminatory reason under the Fair Housing Act.
When Can a Landlord Raise the Rent?
- During the Lease Term: In most cases, a tenant receives protection from rent increases in the middle of a lease term. However, if the rental agreement explicitly allows for mid-term rent increases, the landlord may be allowed to raise the rent.
- At the End of the Lease Term: A landlord can raise the rent when the end of a lease term approaches. The tenant can choose to accept the raised rent and sign the addendum if it fits their circumstances. The landlord and tenant may negotiate the rent, and the landlord can settle on an amount to which both parties agree.
- For Periodic Leases: A landlord may be able to increase the rent for periodic leases, including year-to-year, month-to-month, and week-to-week leases. The landlord should provide appropriate notice to the tenant, depending on the type of rental contract and the laws of the state where they reside.
Reasons for a Rent Increase or Decrease
As a landlord, you may need to create a rent change addendum, indicating an increase or decrease. Explore some reasons for each below:
Reasons for a Rent Increase
- Inflation: You may ask for a rent increase to reflect inflation costs in your area.
- Tenant Added to the Lease: If you let the primary tenant add another person to the lease, you may ask for increased rent to reflect the addition.
- Property Improvements: Improvements to the property, such as new amenities, may justify a rent increase.
Reasons for a Rent Decrease
- Financial Hardship: A tenant experiencing financial hardship may cause you to decrease the rent so you can still receive on-time payments.
- Tenant Removed from the Lease: If you remove a tenant from the lease, you may decrease the rent amount to make the payments more affordable for the remaining tenant.
- Market Competitiveness: If you want to remain an enticing option to a tenant in a competitive market, you may decrease the rent.
Rent Change Addendum Sample
Download a rent change addendum template as a PDF or Word file below:
