A Notice of Rent Increase is a written letter from a landlord or property manager to a tenant that officially communicates an upcoming change in the amount of rent due. This notice is generally issued when a lease is about to expire or to modify a month-to-month rental agreement.
Upon receiving the notice, the tenant has the choice to either accept or reject the new rental terms. To ensure legality, the notice should be sent via certified USPS mail, which provides the landlord with a receipt confirming the date the tenant received the notice.
What to Include in a Rent Increase Letter?
A simple notice of rent increase letter identifies the following essential elements:
- Tenant: name of the person currently renting the premises.
- Premises: address and location of rental property.
- Landlord: name of the person who owns the premises.
- Effective Date: when the tenant must start paying the new rent amount.
- New Rent: increased amount of money the landlord requires.
- Current Rent: the amount of money the tenant has been paying the landlord.
How to Increase Rent
When considering a rental rate increase, you’ll want to balance how profitable your rent investments are with the affordability for prospective tenants.
Step 1 – Know your State Laws
As a landlord, it’s important for tenants to be aware of the state’s laws before signing a rental agreement or paying any fees that may be deemed illegal. This ensures transparency and compliance, fostering a smooth and lawful tenancy.
Certain states operate under the Dillon Rule, a principle originating from Judge John Forrest Dillon’s ruling in the 1868 case of Clinton v. Cedar Rapids and the Missouri River Railroad. This rule restricts local governments to only enact laws explicitly granted by the state government. If municipalities seek to extend their powers beyond those specifically delegated, they must request permission from the state.
The following table showcases rent control laws nationwide:
| Type of Rent Control Law | States Included |
|---|---|
| The Dillon Rule States No Rent Control/ No Preemption | West Virginia, Alaska, Nevada, Pennsylvania, Vermont, Virginia, Rhode Island |
| States That Preempt Rent Controland Mandatory Inclusionary Zoning | Arizona, Indiana, Kansas, Tennessee, Texas, Wisconsin |
| States With No Rent Control/ No Preemption | Hawaii, Nebraska, Montana, Wyoming, Delaware |
| States and Federal Districts with Statewide and Districtwide Rent Control | District of Columbia, Oregon |
| States With Statewide Rent Controland Local Ordinances in Effect | California |
Step 2 – Rental Comparison Analysis
A rental comparison analysis allows you to compare your property with other nearby rentals of the same type, with similar square footage and number of bedrooms and bathrooms.
Researching what other landlords in the area are charging helps determine a fair market price for your rental.
Consider using a rental property calculator, which can help determine operating expenses, such as taxes, insurance, maintenance, and utilities, compared against your desired profit and property value to determine a fair rent amount.
Some amenities that could influence higher rental rates include:
- A building with a doorman
- Swimming pool or fitness room
- On-site laundry facilities
- Clubhouse
- Covered parking
Ensuring a Fair Rent Increase
Realty websites like Rentometer and Zillow can help you compare rental rates in your area to ensure your increase is justified. You can also look to Facebook Marketplace and see what other landlords are charging for rent in your area.
Finally, you can consult with a local real estate agent or property management company for more comparison information.
Step 3 – Review Lease Agreement
Review the lease terms to determine whether it is expiring or has transitioned to a month-to-month rental agreement.
Step 4 – Determine a Valid Reason for Increase
There are many reasons why you may need to send a rent increase notice, including:
- Higher property taxes.
- Rising cost of living.
- Increased insurance premiums.
- Higher homeowner association (HOA) or condo fees.
- Annual inflation rates (The World Bank publishes inflation rates in the US).
Step 5 – Check Your State’s Notice Period
Check the laws in your particular state regarding rent increases. In most cases, you may not increase rent on long-term lease agreements until the end of the lease, and the law requires you to give 30- to 60-day written notice ahead of the lease expiration date.
Month-to-month rental agreements still require written notice, but a landlord has more flexibility regarding when the rental increase will go into effect.
If the lease has expired or no lease exists and the tenant has not signed a new lease, the landlord must follow state and local laws and give the appropriate advance notice before sending a rent increase notice.
Refer to the table below to find the required notice period for the state where the property is located:
| State | Notice Period | Statute |
|---|---|---|
| Alabama | – | N/A |
| Alaska | 30 days | Alaska Stat. § 34.03.290 |
| Arizona | – | N/A |
| Arkansas | – | N/A |
| California | 30 days if the rent increase is 10% or less and 90 days if more than 10%. | CIV § 827 |
Step 6 – Send a Rent Increase Notice
The lease agreement may describe how landlords should send a rent increase notice.
Our free lease agreement template, for example, says that all notices (including a rent increase letter) must be in writing and should be either:
- Delivered in person.
- Posting a copy on the tenant’s door along with certified mail.
- Sent by overnight courier service.
- Sent via first-class, registered, or certified mail with return receipt requested.
Sending a rent increase notice by mail (especially if trackable) creates a better record than delivering it via email or text.TIP
If the landlord has emailed the tenant, another option is to send the letter and a hard copy electronically.
A text message is generally not a good way to create a reliable paper trail for a rent increase notice.
Respect Tenant Rights
When increasing your tenant’s rent, it’s crucial to respect their rights and ensure the process is fair and transparent. Here are the steps to follow:
1. Provide Adequate Notice
Most jurisdictions require landlords to provide tenants with a notice period before a rent increase takes effect. The required notice period is usually outlined in the lease agreement or local laws. Ensure you give your tenant ample time to prepare for the change.
2. Communicate Clearly and Respectfully
Draft a clear and respectful rent increase letter. Clearly state the new rent amount, the effective date, and the reason for the increase. It’s important to maintain a professional and courteous tone to preserve a positive landlord-tenant relationship.
3. Offer Lease Renewal Options
When notifying your tenant about a rent increase, offer them a Lease Renewal Agreement with the new terms. This can provide them with a sense of stability and security.
4. Explain the Difference Between Renewal and Extension
Ensure your tenant understands the difference between renewing their lease and extending it. A Lease Renewal vs. Extension: What’s the Difference? guide can be helpful in clarifying these terms.
5. Include a Rent Increase Lease Addendum
To formalize the rent increase, include a Rent Increase Lease Addendum. This document outlines the new rent amount and any other changes to the lease terms.
6. Allow Time for Negotiation
Be open to discussing the rent increase with your tenant. They may have concerns or questions, and addressing them promptly can help maintain a good relationship and reduce the risk of vacancy.
7. Document Everything
Keep thorough records of all communications and documents related to the rent increase. This can be useful in case of any disputes or misunderstandings in the future.
By following these steps and respecting your tenant’s rights, you can implement a rent increase in a fair and transparent manner, helping to maintain a positive and respectful landlord-tenant relationship.
Avoiding Retaliation
Many states assume retaliation if the landlord sends a rent increase notice or an eviction notice 60 to 180 days after a tenant files an official complaint against the landlord.
Factors To Consider Before Raising the Rent
Keep the current economy and housing market in mind before raising the rent. If you increase the rent, you may risk losing current tenants.
- Tenants with exceptional credit. They may take advantage of low-interest rates and decide that buying makes more sense than renting at a higher price.
- Economic downturn. This could force renters to look for less expensive options.
- A tight rental market. Current tenants are more likely to stay put than risk being unable to find another rental.
- Property improvements. Existing renters will be more accepting of a rent increase if you have recently made improvements to the property (new flooring, paint, appliances, fixtures).
- Desirable location. Your property’s value can increase in a sought-after neighborhood close to good schools, shops, and public transportation.
- Maintain stable rent. If you have long-standing tenants who have been responsible renters, you may want to encourage them to stay by not increasing their rent. On the other hand, a rent increase may be an effective way to move on from less reliable tenants.
IMPORTANT
Landlords can only increase the rent during the term of a lease if the original lease contract allows for the increase and the landlord follows the proper notice period.
How Much Can a Landlord Raise the Rent?
No federal laws limit the amount a landlord can increase a tenant’s rent if you give sufficient notice. However, some states have passed legislation limiting the percentage a landlord can increase rent in a given period. For example:
- California’s Tenant Protection Act of 2019, Assembly Bill 1482, limits rent increases over 12 months to no more than 5% of the local cost of living rate or 10% of the previous rent, whichever is less.
- New York passed the Housing Stability and Tenant Protection Act of 2019, which addressed rent control and limits increases on rent-controlled housing to 7.5% or the average of the last five cost-of-living increases, whichever is less, for tenants renewing a lease.
A rent increase percentage does not limit Massachusetts landlords.However, they are required to provide written notice at least 30 days before the end of a lease period, and the tenant must sign a completely new lease agreeing to the rent increase.
When Can’t a Landlord Increase Rent?
Landlords cannot increase rent if:
- The lease hasn’t expired and doesn’t allow for an increase.
- Proper advance notice wasn’t given according to state and local laws.
- The increase violates rent control or rent stabilization laws.
- It’s in retaliation for the tenant requesting repairs or reporting a housing code violation.
- It discriminates against the tenant based on race, religion, or sexual orientation.
- It’s an attempt to force the tenant to move out.
Alternative Form
If you are a tenant who has received a rent increase notice and wants to vacate the property instead of paying a higher rent amount, you can send your landlord or property manager a Notice to Vacate form.
How to Write a Notice of Rent Increase
Before filling in the details of your notice of rent increase, ensure the top of the form contains the state you are contracting in.
Step 1 – Date the Document
1. Date of Notice. Provide the date of this notice of rent increase.
Step 2 – Enter Tenant Contact Information
2. Tenant Name. Write the full name of all tenants (the persons leasing or renting the property).
3. Tenant Address. Provide the street address of the property the tenant is leasing or renting.
Step 3 – Fill in Rent Details
4. Name of Original Lease Agreement. Enter the name or title of the original lease or rental agreement between the landlord and tenant.
5. Date of Original Lease Agreement. Write the date of the original lease or rental agreement.
6. Current Rent. Provide the current monthly rent amount.
7. New Rent Amount. Write the new increased monthly rent.
8. Date of Rent Increase. Enter the date the landlord will increase the rent.
9. New Rent Due Date. Fill in the day the new rent is due each month.
Step 4 – Ask for Tenant Acknowledgement
10. Tenant Signs and Returns Letter. You can choose whether or not to include a tenant acknowledgment where the tenant signs a statement acknowledging and agreeing to the rent increase.
Step 5 – Provide Landlord’s Contact Information
11. Landlord Name. Enter the landlord’s full name.
12. Landlord Address. Write the landlord’s mailing address.
13. Landlord Phone Number. Fill in the landlord’s phone number.
14. Landlord Email. Provide the landlord’s email address.
Notice of Rent Increase Sample
Download a sample below in PDF or MS Word:
