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How to Write a Rent Increase Letter in 5 Steps (+Free Template)

July 24, 2019

Have you ever met anyone that likes paying rent? I sure haven’t.

And the only thing worse than paying rent is getting notified that your rent is going up. But just like death and taxes, rent increases are inevitable - especially in today’s competitive real estate market. If you happen to be a landlord or property manager, breaking the news to your tenants might seem equally as daunting.

However, sending a rent increase letter doesn’t have to be all that bad, especially if you communicate the news correctly. In this article, we’ll discuss five tips for writing a strong rent increase letter that won’t scare off your tenants, complete with a free downloadable template to help you craft your own.

How to write a rent increase letter

Maximizing ROI is the goal of effective property management. As the market evolves, you need to make sure that your rental properties are priced fairly and competitively. At the same time, you have to be mindful that raising the price of your rent can lead to tenant turnover, which can be very costly.

To avoid turnover, you need to carefully communicate an increase in rent to your tenants. You want them to know that you’re a trusted partner, not a greedy landlord looking to make an extra dollar. Let’s break down everything you’ll need to consider while preparing to write a rent increase letter.

TIP: Just want to cut to the chase? Use this sample rent increase letter as a template to write your own.

FREE TEMPLATE: Rent Increase Letter Download Now →

Step 1: Familiarize yourself with local laws

A leasing agreement is a legally binding document wherein the tenant agrees to pay a certain amount in rent each month for the duration of the lease. Because of this, there are legalities involved with increasing rent. Always make sure your actions are compliant with local state laws. To start, you’ll need to make sure your rental property isn’t located in a rent-controlled area. Your plans to raise the rent could easily be derailed if they don’t adhere to local laws.

Step 2: Identify a price that is fair and competitive

The tenants that occupy your unit are unlikely to stay if the new rent price is outrageously higher than other comparable units in the area. When determining how much to raise the price, look at the prices of other rental properties in your local market that have similar characteristics. You want to raise the price enough that you’re generating a considerable profit, but also acting fair and ethical. If the increase is only slight, tenants are much more likely to be accepting and re-sign a lease with you.

Step 3: Give proper notice

Next, you’ll need to identify how much notice you’ll have to give the tenant before the increase goes into effect. If the tenant is on a month-by-month lease, you’ll need to give at least 30 days notice that the rent price is going up. For a tenant with a set lease term, it’s smart to give at least 60 days notice so they have time to make other arrangements if they don’t re-sign.

Step 4: Write and send a rent increase letter

Now that you’ve done all your research and have locked in a new rent price, it’s time to write a rent increase letter to send to your tenant(s). A verbal exchange with your tenants won’t hold up in court, so it's best to send a formal letter detailing the rent increase.

In the letter, you’ll want to include a few important things:

  • Basic information such as the tenant’s name(s), the landlord and/or property manager’s name and contact information, the address of the rental property, and the date the letter is written.
  • Pricing information including the previous rent price, the new rent price, and the date the rent increase goes into effect.

You don’t have to include the reason why you’re increasing rent. As a landowner or property manager, it’s your right to price the rental unit as you wish. However, you should make sure the body of your letter is friendly, straightforward and concise to avoid any confusion. If the tenants have further questions, it’s best to resolve further matters over the phone or in person. You can send the notice via regular mail, but it’s recommended to send it through certified mail to ensure its delivery.

TIP: Use the template from earlier in this article as a starting point and customize it to fit your message.

Step 5: Plan on next steps

After you notify the tenant of the rent increase, they will either choose to continue leasing from you, or will be moving out at the end of their lease term. Since you gave proper notice, you’ll have enough time to make arrangements for new tenants if the current ones don’t re-sign with you.

Raise rent the right way

Increasing rent is often necessary to keep your rental property profitable. And although it might not be your favorite work-related responsibility, sometimes it’s just part of the job. By following these five steps, you’ll make sure all of your bases are covered when letting your tenants know their rent price is going up.

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