From 2021 to 2022, the US saw an average rent increase of 14.07%, with some cities experiencing hikes up to 40%. Learning how to raise rent fairly and legally can help landlords maintain high-quality tenants.
5 Steps to Raising Your Rental Price Without Upsetting Tenants
Here are five steps to effectively raising your rental price:
- Learn Your Local Laws
- Determine Rental Price
- Identify and Update Lease Terms
- Complete Updates, Repairs, and Maintenance
- Notify Your Tenants
1. Learn Your Local Laws
Most states have local laws all property owners must follow, including raising rent. Learning your local laws helps you avoid any unnecessary issues with your tenants and can be beneficial in discussing your reasoning behind raising the rent prices. These laws can include:
- When a landlord can raise rent – Landlords can typically only raise rent at the end of a lease. However, some leases may have stipulations that allow increases during the lease. Some states also have laws that limit the frequency of rent increases.
- How much a landlord can raise rent – A few states restrict how much a landlord can increase rental prices while others only have rent control in certain areas. Many states have a rent control ban altogether.
- How much notice a landlord needs to provide before a rental price increase – Some locations require a minimum notice period of 30 to 60 days
2. Determine Rental Price
Landlords also need to spend some time researching how much they should increase their rent. This can be beneficial in ensuring that your rent prices are fair and comparable to similar properties. While typical increases are an average of 2% – 3% per year, this varies based on the local rental market and a few other factors.
To determine the appropriate rental price, landlords should research:
- Comparable Properties
- Operational Cost Increase
- Profit
Comparable Properties
Start your research by looking at a few online rental sites. It’s a good idea to find at least 5 comparable properties close to your area or, if possible, in the same neighborhood. Here are some features to compare:
- Lot size
- Age of the unit and upgrades
- Number of beds/baths
- Access to a gym, pool, or clubhouse
- School ratings
- Walkability score
- Safety rating, and features (gated, security guard)
Look at the average rental price of these units and compare them to yours. If the properties are listed higher than yours, raising your price to a similar number won’t be a hard sale to current or future tenants.
For the most accurate results, reach out to your real estate agent. They can easily pull accurate statistics of comparable properties in your area.
Operational Cost Increase
It is important to determine if you have an increase in your operational costs and if so, how much. This may include:
- Mortgage payment
- Property taxes
- Utilities
- Maintenance
- Insurance
- License Renewal
- Fees (HOA or COA, if applicable)
- Marketing and advertising
- Tenant screening
- Property management service (if you use one)
Identifying which costs have increased can help you determine how much to raise the rent. It is also a good talking point to mention to tenants who have concerns.
Highlight a few of the larger increased costs and have the statistics prepared for when you talk to tenants. For example, if your insurance costs alone have risen $300 for the year, a $50 increase in rent may not seem so extreme.
Profit
After you have a good idea of how much your operating expenses are, you can consider your profit margin. Landlords take on all of the risk and liability of owning a property. Your profit margin needs to allow you to have enough cash flow to cover not only your expenses but any emergencies as well as future upgrades.
3. Identify and Update Lease Terms
It’s illegal to raise rent during a lease term unless:
- The lease allows for a mid-term rent increase, usually in response to specific events, such as increased property taxes.
- The landlord and tenant come to an agreement to raise the rent, usually to bring in a roommate or a pet.
For instance, if a tenant is 6 months into a lease agreement with no stipulations for a rent increase, a landlord cannot suddenly change the agreement.
A landlord can, however, let a tenant know at the 9 – 11 month mark that should they plan to continue their lease, the rental price will increase.
Be sure to update any newly signed lease agreement with the updated price.
It’s a good idea to discuss the possibility of rent increases within a lease. If the lease is a month-to-month or multi-year lease, add stipulations that allow you to increase rent as needed or as applies to your local laws. With a year-long lease, notify the tenant that a rental increase at the end of the lease is likely.
4. Complete Updates, Repairs, and Maintenance
If you plan to raise your monthly rental price, you must be sure your property is in the condition that it is worth the increase. The best way to do this is to stay on top of repairs and maintenance.
Let’s say you plan to increase your rent by $75 a month. A small, but fair, increase in your area. A landlord who is on top of property maintenance and quick to repair issues will be less likely to hear complaints about the increase.
It’s also a good idea to consider any property upgrades that may be needed. A tenant who is getting something in return for their increased price may be more likely to stay in place. If the tenant does decide to move, the upgrade will help entice future tenants, even with the higher price point.
5. Notify Your Tenants
Giving your tenants plenty of notice about the price increase is essential as it allows them time to plan for the increase. It also allows them to research comparable properties and determine if it’s worth staying in your unit or finding somewhere else to live.
Many states require a 30 to 60-day rental increase notice. Even if your state doesn’t require a notice, it’s a good idea to give one anyway.
Deliver the tenants a rent increase notice in person, if possible. Be open to conversation about the increase and let them know you are happy to answer any questions or concerns they have.
Direct, professional, and open communication about the change can go a long way to maintaining a good relationship with your tenant.
How Much Notice Do Landlords Need To Give for a Rent Increase?
Check out the table below to see the requirements in your state.
| State | Notice Required for a Rent Increase |
| Alabama | No statute |
| Alaska | 30 days (month-to-month tenants) or 14 days (week-to-week tenants) |
| Arizona | 30 days (month-to-month tenants) or 14 days (week-to-week tenants) |
| Arkansas | 1 month (month-to-month tenants) or 7 days (week-to-week tenants) |
| California | 30 days (less than 10% increase to the rent) or 90 days (more than 10% increase) |
| Colorado | 60 days |
| Connecticut | No statute |
| Delaware | 90 days (mobile homes) or 60 days (other housing types) |
| Florida | No statute |
| Georgia | 60 days |
| Hawaii | 45 days (month-to-month tenants) or 15 days (week-to-week tenants) |
| Idaho | 90 days (mobile homes) or 30 days (other housing types) |
| Illinois | No statute |
| Indiana | 30 days |
| Iowa | 30 days |
| Kansas | 60 days (mobile homes) or 30 days (other housing types) |
| Kentucky | No statute |
| Louisiana | No statute |
| Maine | 30 days (mobile homes) or 45 days (other housing types) |
| Maryland | 90 days (year lease), 60 days (month-to-month lease), 21 days (week-to-week oral lease), or 7 days (week-to-week written lease) |
| Massachusetts | 30 days |
| Michigan | No statute |
| Minnesota | 30 days (month-to-month tenants) or 60 days (mobile homes) |
| Mississippi | 30 days (month-to-month tenants) or 7 days (week-to-week tenants) |
| Missouri | 60 days (mobile homes) or no statutory requirement (other housing types) |
| Montana | 7 days (week-to-week tenants) or 30 days (month-to-month tenants) |
| Nebraska | 7 days (week-to-week tenants) or 30 days (month-to-month tenants)60 days (mobile home tenants) |
| Nevada | 60 days (month-to-month tenants) or 30 days (week-to-week tenants) |
| New Hampshire | 60 days (mobile homes) or 30 days (other housing types) |
| New Jersey | 30 days |
| New Mexico | 30 days (month-to-month tenants) or 7 days (week-to-week tenants) |
| New York | 30 days (tenancy shorter than 1 year), 60 days (tenancy between 1 to 2 years), or 90 days (tenancy longer than 2 years) |
| North Carolina | No statute |
| North Dakota | 90 days (month-to-month mobile home tenants) or 30 days (all other tenancies) |
| Ohio | No statute |
| Oklahoma | No statute |
| Oregon | 90 days (after first year of tenancy) or 7 days (week-to-week tenants) |
| Pennsylvania | No statute |
| Rhode Island | 60 days (month-to-month tenants over 62 years old) or 30 days (all other tenancies) |
| South Carolina | No statute |
| South Dakota | 30 days |
| Tennessee | No statute |
| Texas | No statute |
| Utah | 15 days |
| Vermont | 60 days |
| Virginia | 7 days (week-to-week tenants) or 30 days (month-to-month tenants) or 60 days (if lease contains renewal provision) |
| Washington | 60 days (unsubsidized housing) or 30 days (subsidized housing) |
| West Virginia | No statute |
| Wisconsin | No statute |
| Wyoming | No statute |
