Rental Increases | Best Practices

How to Raise Rent

1. Check your local laws regarding rent regulations

In South Carolina and a number of other states, there is no cap on the amount rent can increase–although landlords can't raise the rent during the fixed term of a lease unless the lease specifically permits that. Month-to-month rental agreements typically allow you to raise the rent at any point, as long as you give enough notice. Usually, that means 30 days, but sometimes a 60-day notice is required. Check your local landlord-tenant laws.

2. Make rent increases an aspect of your lease

When onboarding your tenant, tell them that you keep your property rents in line with the market. Because of this, rents may or may not increase for the next lease term, depending on the market rate. This gives them a heads-up about what to expect, ensuring no surprises.

Most tenants expect reasonable rent increases when they renew their leases. The word ‘reasonable’ is key here, however, which brings us to the next point.

3. Determine how much you can raise rent

You’ve already set the stage by mentioning that rents may increase. A $100 increase will give you an additional $1,200 during their second year – but if they choose to leave, or you’re forced into eviction, how long will it take you to turn it around? One lost month of rent will all but eat up that rent increase.

Is it worth the gamble?

What if you split this year’s increase with them? Or only increase it to $75 instead? Most tenants who were considering staying won’t leave over a new rent that’s only $50 more, especially if you properly screened them and they are financially capable of affording the payments in the first place.

Keeping rent increases conservative typically pays off in the long run as it ensures your property doesn’t stand empty, losing your rental income.

4. Keep on top of repairs and maintenance

Be honest with repairs and maintenance before trying to raise the rent on your tenant. If you’ve kept on top of repairs, resolving all issues promptly, and especially if you’ve made major upgrades to the property while the tenant has been living there, you’re well within your rights to increase the rent. But if you’ve been neglecting the property, especially if the tenant has made requests for repairs or renovations, you might not have a case for increasing the rent. 

Often, though, the lease renewal point is a good time to make a fresh start with your tenant. If you make all the repairs they’ve been asking for, perhaps throwing in an appliance upgrade, they could still agree to a reasonable rent increase.

5. Notify your tenants

How much notice to give will depend on where you live. Some states or municipalities require giving at least 30 days’ notice but others insist on 60 or even more. Pay attention to local laws and get the appropriate legal advice before sending out rent increase letters.

6. Set fair market rates

You shouldn’t haggle with tenants about the rent increase if it’s set to a fair amount. You will need to do some local market research before you decide on what’s fair. Compare your property to what is available at the time you are considering the rent increase. Other properties offering fewer amenities at a higher price are a good indicator you’re under market, and you should raise your rent.

Most landlords end up raising the rent by between 3 and 5%. Beware of setting a massive hike, though. If your tenant currently pays you $1,600 a month and you decide to raise the rent to $2,000, they’ll almost certainly leave.

FAQs: How to Raise Rent on a Tenant

Is it legal for a landlord to raise the rent on a tenant?

Typically, yes, but different states and even cities have different laws on how often a landlord can raise the rent. In most cases, it is only possible to raise the rent during the lease renewal period, unless the tenant is on a month-by-month tenancy.

When can a landlord not raise the rent on a tenant?

There also are laws that prevent landlords from raising rents on a tenant as retaliation or in an attempt to make them move out. 

Finally, a landlord cannot raise rent without giving due notice.

How much can a landlord raise the rent on tenants?

The typical rate of annual rent increase across the US is 2%. Depending on where you live, an increase of between 3 and 5% is usually possible. Note that in some areas, you will have to pay your tenant’s relocation costs if you raise the rent above a certain rate. 

How much notice for rent increase do landlords need to give tenants?

The typical notice period is 30 days before the current lease expires. However, different areas have different requirements, so you should always seek legal advice before giving your tenant a rent increase notice.

What is the average rent increase per year?

Final Thoughts

Raising the rent on a tenant can be a difficult but necessary step for landlords. By following the steps outlined above, you can ensure that the process is conducted smoothly and that your tenant’s rights are respected. Please reach out to request sample rental increase letters to send to your tenants.