Should you wish to add a rent increase for the next rental period, this must be fully communicated in writing. One of the most important aspects of property management is the ability to retain tenants from lease period to lease period. Learning that faithful tenants wish to renew their lease is usually music to the ears, as having to re-list rental units takes time and money.

Rent Increase

Tenants often base their decision on whether to stay or move based on projected rent increases. This is why it’s crucial to deliver a letter that is both friendly and informative. In addition, you need to make sure these increases exist fairly within local regulations. Usually, increases occur in a range of 3 to 5%, but up to 10% may be legal in some jurisdictions.

Property rental pricing guidelines

There are several key elements to let your tenants know that a rent increase is imminent. Generally, it is customary to give each rental unit a minimum of thirty days’ notice.

While your area may not limit the amount you can raise the rent, it is advisable that you make your request both fair and equitable. If you frighten or alienate your tenant, this may drive them away for good. As well, regulations in your area may prevent raising rents to drive undesirable tenants out.

Rent Control or Rent Stabilization

As stated before, always check regulations in your given locale. If your rental property falls under rent control limitations, future rent additions must be bound by the following:

  • Whether it is legal to raise the rent for units in your building or development
  • The frequency between rent changes; be it yearly or after a lesser lease period
  • If local rent control laws allow for increases during the lease period
  • The percentage of increase allowed, including any monthly, quarterly or yearly fees
  • How far in advance a rent increase must be issued in a number of days, weeks or months

Create a professional letter that is friendly in tone

The letter you write serves as a permanent record of formal communication with your individual tenant, family or group of tenants; as in roommate situations. Make sure your request is to the point, professional, but polite in nature. For this reason, a formal letter and not a text, telephone call or voice mail message is proper form.

What to write?

If writing letters and notices don’t come naturally to you, feel free to use an already established template. These can be found online and come in a variety of styles. Always make it clear that tenants should contact you with any questions, concerns or pressing scenarios. These might include a change in the names of the tenants or a short extension of the current lease to meet with their moving date.

Using stationery from your property management company, address the letter to the tenant or tenants named on the lease. Avoid a generic opening like “Dear Tenant” or “To Whom it May Concern.”

The subject of the letter should be at the top of the page as a heading that immediately lets the reader understand the importance of your communication. A simple but effective heading is “Change in Rent Amount” or “Rent Change Notice.” Whenever possible, center your header and emphasize it with bold lettering and/or underline.

While your letter should reflect a formal request, it should never read like a demand letter. Remember that it helps to give your tenant a short explanation as to why an increase in rent is necessary at this time. Perhaps you’ve made improvements to the property or plan to do so in the near future. At all times you want your tenant to understand that this increase is neither arbitrary nor greedy, but in the very best interest of the property they reside in.

The following needs to be included either in paragraph format or in the form of a running list:

  • The legal name of tenant or tenants (Do not use nicknames or casual names.)
  • List the address of the property, including the unit number
  • The name of the landlord or property management team
  • A postal address, email address and phone number where you can be reached
  • The date that the letter is written, which should be at or near the date of delivery
  • When the increase in rent is to take effect and for how long
  • The current rent and the exact amount of increase including allowable fees

Keep your letter short, easy to read and right to the point. Always let them know that you appreciate your long-time tenants. This alone goes a long way to add warmth to any landlord to tenant letter. After all of the pertinent information has been listed, sign off with “Thank you” and then “Very truly yours” or “I look forward to hearing from you at your earliest convenience.”

To make sure you hear from the tenant in a timely manner, you would be wise to add a form for the tenant to return to you. It needs to have an area where they can sign their name(s) in agreement to the change in rent or let you know that they will be moving when their lease has expired. Either way, their reply to you should be kept on file so that you can prove that they were properly served notice.

How should you send this letter?

The letter should always be enclosed in a sealed envelope and never just shoved under their door. Hand deliver it or send it through the postal service using a return receipt for your records. The date of certified delivery should begin the number of days’ notice given. Because many tenants communicate solely through digital means or may be traveling, following up via email is also an excellent idea.