No one wants to get a notice from their landlord that their rent is going up. However, it appears that tenants are witnessing unprecedented price increases. But what about these dreaded rent increases? And how much can a landlord legally raise the rent?
Rent increase is unavoidable in the life of any tenant. There is no restriction to how much your landlord can increase the rent in most locations without rent control. However, landlords cannot raise the rent on the spur of the moment: Most states have statutes that govern when your landlord can raise the rent and how your landlord must send you a rent increase notice.
In addition, landlords cannot increase your rent in most jurisdictions as retaliation for exercising certain tenant rights, such as reporting your landlord’s code infractions. Landlords are also prohibited in all states from raising rent for discriminatory reasons.
5 Steps to Increase Rent Successfully While Keeping Tenants
#1. Research Local Rental Laws
Before you consider the rent increase when renewing a lease, it’s a good idea to familiarize yourself with your local rental rules. In terms of boosting rent, state and local regulations differ, with some places barring rent increases entirely, while others have rental limits that prevent landlords from raising rent above a specific percentage or dollar amount.
#2. Make rent increases a condition of your lease.
If you live in an area where you can raise the rent, your tenants will most likely expect you to do so every year. To avoid surprises, you should still make this increase clear by including it in the initial lease.
The initial lease should include information concerning the increase, such as what percentage of the rent will be raised each year or how much money will be raised. Remember to include any information regarding when the tenant must provide notice as to whether or not they intend to renew the lease so that you both have enough time to prepare for the next steps. A customizable lease template can be used to specify each step of the rent increase process.
#3. Determine How Much Rent You Can Raise
The amount of a rent increase to request will be determined by the market value of comparable units in the region. Conduct some research and collect a list of available unit rents in your property’s neighborhood, then use those costs to calculate your new monthly cost. For example, if the typical rent for a one-bedroom apartment with equivalent facilities is $1,600, increasing your rent to $1,900 is not a good idea.
Then think about vacancy rates. Do you notice many unoccupied apartments identical to yours in nearby properties? Have you had trouble finding new tenants for your other properties? Is your rental in a high-traffic area with consistent demand? Knowing whether your tenant will be able to simply locate another apartment after you increase the rent will help you decide whether it’s worth it.
It’s also crucial to remember that just because similar rentals in your region are renting for a given amount, it doesn’t imply you can substantially boost your rent to match them. While rent can be significantly increased when looking for new renters, no present tenant will accept a significant rent increase.
A typical rent increase would be between 3% and 5%, depending on your situation, local rental rules, and the present rent.
#3. Upgrade the rental and keep up with maintenance needs.
If you’ve made major improvements to your rental property while your current tenants were still living there, you may have a good reason to raise your rent to reflect these improvements. On the other hand, if you’ve ignored your renters’ demands for repairs and maintenance, you generally don’t have much of a case for a rent increase.
If you decide to increase the rent, you can give your present tenants a greater reason to renew by upgrading some older appliances or making other property changes they’ve requested. Similarly, it’s likely that your renters would request specific improvements before agreeing to a lease renewal and rent increase.
#4. Inform Your Tenants
It’s time to notify your tenants after you’ve decided how much you want to raise the rent. This should be done 45 to 60 days before the lease expires.
Because the best-case scenario for a landlord is to effectively raise the rent while maintaining a good connection with their tenants, you should have an idea of what you’re willing to compromise on in order to make your tenant comfortable with the increase. Compromises could include repainting the unit, replacing obsolete appliances, providing free parking, or other low-cost concessions.
Once you’ve reached an agreement on the rent increase, make sure to provide your tenants with a signed and dated “rent increase notice” for your own records. This is a smart habit to follow before renewing any lease.
#5. Giving tenants a rent increase notice
If you decide to increase your rent, it is critical to communicate with your tenants clearly and promptly. Check with your attorney to see if there is any special information you need to include in your market and what the notification timeline is. A California rent increase notice will typically include the following information:
- Each tenant’s name
- Address of the property
- Your name and contact details
- The date of the notice of the rent increase
- The prior tenancy’s rental amount
- New monthly rental amount
- The beginning date of the rent increase
- The rent amount section of the lease agreement
- Non-renewal notification is required.
- Non-renewal notification section of the leasing agreement
Staying current on market conditions and trends in your area allows you to make more informed judgments about acquisitions, property management, and other matters. You’ll have all of the information you need, including insights on comparable properties and market data].
When and How Can Your Landlord Increase the Rent?
Except in rent-controlled states and towns, your landlord’s legal power to raise the rent is mostly determined by whether you have a lease or a month-to-month renting agreement.
Can a Landlord Raise the Rent During the Term of a Lease?
Landlords are not permitted to raise rent during the life of a lease. The only exceptions are when the contract specifically states that a mid-term rent increase is permitted, or when you and your landlord agree to raise the rent (for example, because you’re bringing in a roommate or buying a pet).
In most states, after a year-long lease expires, the landlord can raise the rent to whatever market-supported price. However, in states or towns with rent control, the landlord may be limited in how much he or she can raise the rent.
Can a Landlord Increase Rent for a Monthly Tenant?
When you have a month-to-month renting arrangement, landlords find it easier to raise the rent. When you have a month-to-month rental agreement, your landlord can raise the rent (or amend any other provision of the rental agreement) by providing you with the required notice under state law.
Most states require notices of rent increases to be in writing, delivered to the tenant in a specific manner, and provided a particular number of days before the increase takes effect (typically 30 days). In addition, the notice of rent increase must be in writing; in some states, certified mail is necessary.
Oral notices to increase rent are not valid in most states and do not compel you to pay a higher rent unless you expressly consent to it.
What to Do If Your Landlord Incorrectly Raises Your Rent
You have choices if your landlord fails to give you sufficient notice of a rent increase, or if you believe your landlord is raising your rent for discriminatory or retaliatory reasons.
Whether you have a lease or a month-to-month rental arrangement determines how you respond to an incorrect rent increase notice.
When You’re a Month-to-Month Tenant, How Do You Respond to an Illegal Rent Increase?
As a month-to-month tenant, keep in mind that your landlord has a lot of leeway in raising your rent, including the option of providing you only 30 days’ notice. If you wish to continue in your apartment and your landlord’s planned rent increase isn’t a significant one, you could be better off accepting it without pointing out the erroneous notice. After all, the landlord can just fix the mistake and try again.
So that the amount of the increase does not mysteriously grow, request that the landlord write it down. The increase should be included in either a new rental agreement or a documented adjustment to an existing rental agreement.
When You Have a Lease, How Do You Respond to an Illegal Rent Increase?
If you have a lease, the issue is slightly different. Because one of the primary benefits of a lease is the protection from rent increases during the lease period, it’s a good idea to fight any planned rent hikes.
In some cases, however, it may be a mistake to inform your landlord that the rent payment clause cannot be amended during the term of the lease. If you’ve been consistently late with your rent or violated another important term for which you could be evicted (for example, your boyfriend has moved in, violating your lease’s tenant limits), you may wind up winning the battle but losing the war. In summary, if the landlord has a legal reason for eviction, it may be wiser to accept the rent payment change than to assert your rights and risk losing your tenancy—especially if you intend to stay in the property for an extended period of time.
Rent Increase as a Result of Retaliation or Discrimination
Landlords are not permitted to raise rent in a discriminatory manner, such as solely for members of a specific race or religion, or only for families with children. Proving discrimination can be challenging, but if you believe you have sufficient evidence of the discrimination—for example, testimonials from other tenants who have received comparable treatment because of their status—you may be able to dispute a rent increase.
In addition, in most places, your landlord cannot utilize a rent increase (or evict you or reduce your services) in retribution for exercising a certain legal right. For example, if you file a valid complaint with a government agency about defective circumstances in your rental apartment, your landlord cannot raise your rent to punish you.
In some areas, the law presumes evil intent on the part of your landlord if the increase occurs within a particular time range of when you exercised your legal right. In Arizona, for example, evidence of a tenant complaint within six months of the alleged retaliatory conduct generates a presumption that the landlord is acting retaliatorily. (Arizona Revised Statutes 33-1381 (2023).)
What Effects Does a Rent Increase Have on Your Security Deposit?
Rent increases are frequently accompanied by increases in security deposits. Here’s how it works: Many states limit the amount of a security deposit that a landlord can charge. Deposits are typically limited to a multiple of the monthly rent—for example, the maximum deposit may be twice the monthly rent.
So, if your landlord increases your rent legally, they can also legally increase your security deposit. For instance, if the deposit is twice the monthly rent and your $1,000 rent has increased to $1,100, the deposit maximum increases from $2,000 to $2,200.
Negotiating a Rent Increase with Your Landlord
There is little you can do legally about a rent increase that does not violate a rent control law and is neither discriminatory nor retaliatory. The landlord can charge whatever the market will bear (until rent control is in effect). However, you might appeal to your landlord’s business sense.
Although the purpose of a landlord is to generate money, smart landlords understand that high rents are not the only way to make a lot of money. Long-term renters are the greatest because they are low-maintenance—they don’t have to be evicted, sued, coddled, cleaned up after, reprimanded for breaking the rules, or interviewed and researched as part of the time- and money-consuming new-tenant application process.
If you’re a good, long-term tenant who can persuade your landlord that the rent increase will force you to relocate, he or she may at least mitigate the increase. Your bargaining power with the landlord will increase if you can demonstrate that many other steady, long-term renters are similarly dissatisfied and considering leaving. If the rent increase impacts others in your building, get together to make your case. Remember that even in a tight rental market, finding dependable, long-term tenants can be difficult.
Conclusion
No tenant will be pleased to pay extra. However, if you know how to raise rent in an organized and reasonable manner, you will have fewer complaints. You may make each rent increase more predictable and hence more pleasant for your tenants if you include it into your lease with specific advance notice requirements.
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