What to Consider Before Raising the Rent

By Lorena Roberts on January 24, 2019

As the New Year rolls around, we all start thinking about ways we can improve our lives. Whether it’s financially, spiritually, personally, or work-related, making New Year’s Resolutions is how we continue to improve who we are over long periods of time. Many people set goals- financial, health-related, or mentally – and they plan to follow through with those goals by the end of the New Year.

As a landlord, you might be looking for ways to improve your financial situation, be a better landlord, or update your properties. If you’re considering raising the rent on your tenants, there are a few things you need to consider before doing so. Many times, there are legalities to raising the rent, as well as backlash that may complicate the situation. As a landlord, your main goal is to manage your investments in a smart way, so before you decide to raise the rent on your tenants (or your future tenants), here are some things you should ask yourself:

1. Your tenants have rights — can you legally raise the rent in your area?

When landlords decide to raise the rent on their tenants, it’s often because they’re trying to cover a mortgage payment, insurance, and property maintenance. But before you just up and decide to double what your tenant is paying, you need to look into the legal way to do this. For instance, you must give your tenants notice of at least 30 days. Usually, if your tenant has signed a lease, they are locked into paying that price for the entirety of the contract. Raising the rent on tenants 30 days in advance usually only happens when they’re on a month-to-month contract.

Your tenants have a right to appeal your rent increase. Depending on the landlord/tenant laws in your city, the appeal may or may not stop the rent increase from happening.

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2. Is your property “rent stabilized?”

In some places, where real estate and housing is just crazy expensive, laws will be put in place to keep the rent from increasing astronomically. It’s tough to afford housing when it takes more than 1/3 of what you make every month (and we also call this being “house poor”). Before you just up and decide to increase the rent on your tenants, you should make sure that your property isn’t considered “rent-stabilized.” If it is, you’ll need to hold off on increasing your rent.

Typically, once per year, rent stabilized properties are reviewed by the city.

3. Remember to check on section 8 housing laws, disabled tenant laws, and senior citizen rent increase exemptions.

As you’re probably guessing by now, deciding to raise the rent on one of your properties isn’t a decision you can make quickly. There’s quite a bit of research that’s involved in the whole process. Before you begin drafting a rent increase letter (see more below), you should check to make sure that your property doesn’t fall under any of the above exemptions to a rent increase.

Opening your property to section 8 housing means you’re under many more restrictions than you would be if you chose to exclude those possible tenants. Before you can impose a rent hike, you should check to make sure you’re legally allowed to. 

Because disabled members of our communities are likely on a fixed income, there are laws protecting them from rent increases in some places. If you have a disabled tenant living in one of your properties, you should check the laws for your area before you impose a rent increase.

The same goes for senior citizens. This is going to vary depending on where your property is located. But, again, before you start drafting that notice, you should make sure you’re within your rights as a landlord to raise the rent.

via Pexels.com

4. Draft a rent increase letter that lays out the situation clearly.

Raising the rent on your property probably makes you feel like “the bad guy.” For many people, their housing situation is the most stressful — especially those who are struggling to make ends meet. So while some may think that the worst part of being a landlord is evicting someone, it’s actually telling your current tenants that they’re about to have to pay more if they want to stay.

Once you’ve decided you’re going to raise the rent, you need to draft a notice that lays out the situation nice and clearly. You want to answer as many questions for the tenant as you can in this letter, explaining why you’ve decided to do it. You might be intimidated by having to write this type of letter, so here are some pointers:

  • Before you offer lease renewal, this letter needs to be finalized and sent to your current tenants.
  • Keep the language simple. Depending on who your tenants are, their education is varied. Think of how newspapers are typically written on an eighth-grade reading level — you should do the same. You don’t need to send your tenants a packet of information that they won’t understand. Lay it out very clearly.
  • Don’t forget to include dates/times/necessary information. This is an official letter. You need to include all of the information necessary for this piece of paper to hold up in court. While you’re writing it, pretend that a judge is looking it over. Does it make plain sense? If not, it’s time to re-write.

5. Consider incentives for your tenants if they renew and accept the rent increase.

There are extra costs that come with moving a new tenant into your place. If you want to raise the rent, but you also want your current tenants to stay, think about an incentive that will keep them there. Whether it’s a gift card, a new appliance, or some other wanted perk, this could be the perfect way to getting what you want while giving your tenant a reason to keep renting from you.

6. Leave the door open for communication.

You want your tenant to feel welcome to ask questions and come to you with concerns. Just as you appreciate their attention to detail and their proactive-ness, they appreciate yours. Once you’ve delivered the notice that says you’re raising their rent, make sure they know that you’re available if they have questions or concerns.

Being a landlord comes with lots of responsibilities. Every time you turn around, you feel like you’re fixing something at one of your properties or trying to fill the next twelve months with a tenant. As landlords across the country start looking for ways to be in better financial positions, they’re also investigating their rights and considering rent increases. As you do the same, there are several things you should consider.

By L. Roberts

Uloop Writer
University of Tennessee - Knoxville
In her spare time, she enjoys spending time with her pup at the dog park and binge watching Netflix with endless cups of Hot Cocoa.

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