The Landlord’s Guide to Rent Increases

Rent increases need cautious planning and open discussion with renters. Learn how to enhance your rental revenue while avoiding legal issues.

What you will discover:

When will I be able to increase the rent?
Is it lawful to increase the rent throughout the term of a lease?
How does one go about increasing the rent?
Are there any legal restrictions on how much rent may be raised?
What can landlords do if tenants refuse to pay the higher rent?

Raising rent may seem to be a simple approach to raise revenue and profits, especially if the landlord is in need of the additional cash. External reasons like as inflation, a thriving market, and interest rate pressure might also prompt landlords to consider boosting their rents. However, raising rent without provoking backlash requires adherence to rules and open dialogue with renters. Rent increases might be legally problematic. The answers to frequently asked questions might assist you manage the procedure.

When will I be able to increase the rent?

Before determining whether or not to raise the rent, landlords often review their Lease Agreements as well as the current local real estate market circumstances. Even in a strong market, raising rent too much may result in a loss of renters, a greater turnover rate, longer vacancies, and a reduction in your rental company. Charging too little may harm cash flow, resulting in a poor return on investment. Rents that are much lower than the market norm may draw the ire of prospective renters. If your costs are too low, good prospective renters may opt to avoid renting from you.

Raising your rent to market rate, or making modest yearly increases that do not exceed market rate, may cause less interruption to your company while renters decide whether to accept the increase or go. Tenants are less likely to depart if their comparable unit alternatives are priced similarly. Furthermore, lease agreements, as well as state and municipal legislation, may restrict a landlord’s power to increase the rent.

Is it lawful to increase the rent throughout the term of a lease?

Lease agreements indicate how much rent a renter must pay for a certain period of time. A landlord may not be allowed to increase the rent before that time period finishes unless the Lease Agreement authorizes it. A lease may allow for mid-lease rent hikes for reasons such as property upgrades, additions to the supplied facilities, or an increase in the number of renters.

However, once the lease term expires, a landlord may normally increase the rent. Most jurisdictions require landlords to provide tenants with written notice of rent increases at least 30 days in advance.

How does one go about increasing the rent?

Lease agreements, as well as state and municipal legislation, often include a maximum cash or percentage increase permitted. To minimize shocks later, landlords should disclose their rental rate increase policy to renters before they move in. After all, not every renter reads the terms of their lease.

Landlords are required by law to inform tenants of anticipated rent increases. Landlords are often required by state and municipal legislation to offer at least 30 to 60 days’ notice, if not more. Consult a lawyer if you are unclear about your state or local standards. To minimize misunderstanding, landlords may choose to have tenants sign a Lease Amendment stating the rent increase and the date it will go into effect.

Before increasing a tenant’s rent, keep the following crucial criteria in mind to prevent misunderstanding and legal issues:

Tenants should be notified of rent increases in writing well in advance of the increase.
Explain how the higher rent makes the property more competitive in the local market.
Maintain steady rent increases of 3% or less every year, if permitted by state and local legislation.
Follow state and local rules when increasing rent and providing enough prior notice.
If the renter refuses to pay the increased rent, give them a definite move-out date.

Are there any legal restrictions on how much rent may be raised?

Landlords are always confronted with mortgages, insurance, maintenance bills, repairs, utilities, and taxes. These costs may soon build up, leaving landlords wondering how much they can increase rents without breaking the law.

The regulations regulating rental rate hikes vary by state. Many jurisdictions have laws governing how much written notice a landlord must provide before raising the rent. Rent control or rent stabilization regulations in certain locations may also limit rent increases. Here are some examples of rent-increase legislation in five major states:
California

If the rent increase is less than 10%, the landlord must provide renters at least 30 days written notice. A rent increase of more than 10% must be announced at least 90 days in advance.

New York City

In New York City, rent control rules remain in place. Rent-stabilization regulations allow the local government to restrict rent rises to certain levels. In contrast, if a tenant has a month-to-month contract and the apartment is not rent-controlled, the owner has the right to increase the rate. If a landlord intends to increase the rent by more than 5% or not renew the lease, he or she must inform the tenants. Unless otherwise agreed, the landlord may terminate the tenancy when a lease expires by giving advance notice.
Unless otherwise agreed, when a lease ends, the landlord may terminate the tenancy by providing prior notice.

Texas

According to Texas law, rent increases differ depending on the kind of lease. A tenant with a month-to-month lease must be given at least 30 days’ notice of any planned modifications, including a rent increase, under the legislation. A tenant is presumed to accept the new rent if they do not terminate the lease.
If a tenant does not terminate the lease, it is assumed that they will accept the increased rent.

Colorado

Because Colorado has no rent control legislation, landlords may increase the rent at their discretion. A landlord must, however, provide renters sufficient written notice at least 10 days before terminating a month-to-month contract.

Florida

Rent hikes in Florida are not limited. They are entirely at the discretion of the landlord. Florida law does not specify how much notice is needed to the renter, if any.

What can landlords do if tenants refuse to pay the higher rent?

If a renter fails to pay the higher rent, you should speak with them before initiating any legal action. If it was a minor error, your renter may be willing and able to settle the overdue balance. If the renter refuses to communicate or otherwise signals that they are reluctant to pay the additional sum, you should consider evicting them.

Evictions may be difficult, and even little errors can cause delays and additional fees. You should create an Eviction Process Worksheet before starting eviction proceedings against a renter. This may assist you in determining whether a tenant should be evicted and organizing the information you may need throughout the legal procedure. The eviction procedure varies from state to state and may be governed by local or county regulations.

Evictions are time-consuming, expensive, and traumatic for both landlords and renters. Before pursuing legal action, it is usually more efficient and cost-effective to address the matter via open conversation. If a tenant fails to pay their rent, a landlord may be required to serve an Eviction Notice.