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.
- What is a Notice of Rent Increase Letter?
- Reasons for a Rent Increase
- How to Increase Rent
- What to Include in a Rent Increase Letter?
- How Much Can a Landlord Increase Rent?
- When Can a Landlord Increase Rent?
- How to Send a Rent Increase Notice
- How to Write a Notice of Rent Increase
- Notice of Rent Increase Sample
What is a Notice of Rent Increase Letter?
Landlords often send notice of rent increase letters when they want to change a tenant’s monthly rent to a higher amount.
As a reference, a rent increase notice is also known as a Rent Increase Letter.
If there is no lease or the lease has expired, 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.
Be sure to check your local landlord-tenant laws. Some municipalities have rent control or stabilization laws regulating rent prices and limiting how much or when landlords may increase rent.
Reasons for a Rent Increase
There are many reasons why a landlord may need to send a rent increase notice.
For example, there may be an:
- Increase in property taxes
- Increase in the cost of living
- Increase in insurance premiums
- Increase in homeowner association (HOA) fees or condo fees
- Annual inflation (The World Bank publishes inflation rates in the U.S.)
When can you NOT send a rent increase notice?
There are several situations when a landlord cannot send a rent increase letter.
- Lease has not expired and the contract does not allow an increase
- Landlord did not give the correct advance notice period according to state and local laws
- Landlord violated local laws on rent control or rent stabilization
- Retaliating against the tenant for asking for repairs or reporting a housing code violation
- Discriminating against a tenant based on tenant’s race, religion, or sexual orientation
- Landlord increased rent in bad faith to try to force the tenant to move out
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.
In California, for example, the Attorney General explains retaliatory rent increases. It is also illegal to raise the rent because a tenant reported a housing code violation.
Additionally, California has statewide and individual city rent control laws that landlords should know about before issuing a rent increase notice.
The court may be more likely to find a landlord guilty of unlawful retaliation if a rent increase letter shows monthly rent is higher than the rental market rate.
Consequences of Not Using a Rent Increase Notice
Landlords prevent confusion and have a better chance of upholding their legal rights by putting a rent increase in writing.
If you do not send proper notice of rent increase letter in advance, the following preventable consequences may occur:
|1. Lost opportunity cost for||1. Lost opportunity cost for|
|Increased rental income||Finding a more affordable rental place|
|A new rental agreement||2. Expensive lawyer fees to|
|2. Expensive lawyer fees to||Initiate a lawsuit for retaliation or discrimination|
|Dispute an alleged retaliatory action or discrimination||3. Mental anguish|
|3. Mental anguish||Confusion about verbal agreement to not raise rent|
|Confusion about verbal agreement to raise rent|
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.
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
- Covered parking
Realty websites such as Zillow are good resources for comparing your property to others. 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.
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 if it’s 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.
Provide Ample Notice
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.
Ideally, you should give tenants as much notice as possible and include an explanation for the rent increase.
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 Much Can a Landlord Increase 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 who are 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 a Landlord Increase Rent?
If you have an existing lease or rental agreement that has not expired, check your contract to see if you can increase the monthly rent. If you cannot increase the rent, you must wait until the end of the lease.
You could send a letter 60 days before the lease ends to warn tenants so they can decide whether to renew the agreement with a new increased rent.
If you have had good experiences with the tenant, you could also waive rent increases to avoid the hassle of finding another tenant, should your current tenant not want to pay a higher amount.
If you do NOT have a lease or rental agreement or the lease has already expired, you must send a rent increase letter in advance, typically 30 to 60 days, depending on state and local laws (and depending on your lease contract, such as month-to-month).
For example, in California, for month-to-month leases or week-to-week leases, landlords must give at least a 30-day notice period if the rent increase is 10% or less and a 60-day notice period if the rent increase is 10% or more.
You can learn more about rent increases for various lease terms from the California Department of Consumer Affairs.
How to Send a Rent Increase Notice
The lease agreement may describe how landlords should send a rent increase notice
The free residential lease agreement sample, for example, says that all notices (including a rent increase letter) must be in writing and should be either:
- delivered in person
- sent by overnight courier service
- sent via first-class, registered, or certified mail
If the landlord has been in touch with the tenant by email, another option is to electronically send the letter and send a hard copy for good measure.
Sending a text message is generally not a good way to create a reliable paper trail for a rent increase notice Read more about the pros and cons of text messaging between landlords and tenants on Zillow.
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
Below you can find what a notice of rent increase typically looks like:
Notice of Rent Increase