A rent increase notice is a letter sent to your tenants informing them of an upcoming rise in their rent payment.
A template for it, on the other hand, is a generic form with fill-in-the-blank sections, allowing landlords to customize the form with residential unit information, tenant data, new rates, and other personalized information.
This type of notification occurs when a tenant’s lease is about to expire and needs renewal or when a tenant is on a month-to-month agreement. A rent increase helps landlords keep their properties competitive with the current market and helps ensure the landlord is receiving the optimal rate for their properties. After deciding to increase the rent, a notice offers the tenant proper notification of the increase and gives them the option to renew their lease or vacate the premises.
Alternate names for this notice include Notice to Increase Rent, Rent Change Notice, and Letter to Increase Rent.
You can generate a template for your state using this:
What is a Rent Increase Notice Template?
Following are some free templates:
When is It Time for a Rent Increase?
There are two circumstances when landlords issue rent increase notices – month-to-month agreements and at the end of a lease agreement. In most states, landlords must give tenants 30 days’ notice of an increase when their lease is up for renewal. However, depending on local and state laws and the terms of your lease, notice may have to be delivered earlier, such as 60 or 90 days before the lease expires.
Consult with an attorney to ensure proper notification because violating any laws could invalidate the increase.
For month-to-month lease agreements, landlords may consider raising the rent to cover standard inflation, property upgrades, or meet the market’s increased demand.
These are:
Standard inflation
Every year, the cost of goods and services increases, including the cost of housing. A rental rate increase is in response to standard inflation, which causes the market to respond to multiple long-term economic trends, the maintenance of the property, and other financial factors affected by inflation.
Property upgrades
If a housing unit or community amenities need significant upgrades, an increase in rent passes the costs on to the tenant. Upgrades help make these properties more desirable and offer access to new amenities or benefits to living in them. Recoup property upgrade costs by raising your tenant’s rent when it is time for renewal.
Increased demand
When the rental market experiences a surge in demand, the demand can lead to a rise in rates. Increased demand can arise from various factors, including a decline in comparable properties, natural disasters, new employment opportunities bringing in new residents, economic factors, a decrease in homeownership, and a result of more effective marketing. When the demand for such properties increases, landlords can raise the rent to stay competitive with current market trends.
How to Write a Rent Increase Notice
A Rent Increment Letter has different components, ensuring everything is legally covered when notifying your tenant of the upcoming rate increase. The sections include the header, concerning the lease, a proposed increase, and a closing. A friendly yet-to-the-point letter can make all the difference when alerting tenants to the changes.
The following are the important components of this notice:
Rent increase header
The header ‌serves as a greeting and an introduction to what the tenant can expect from the letter. Items you must include in the header are the tenant’s name (all those who reside at the location), the property address, the return address, the landlord’s name, contact information, the date the document was drafted/sent, and a greeting. In the greeting, address every tenant who signed the original lease agreement by name.
The concerned lease
This section of the notice must include the original date of the existing lease when signed by both the landlord and tenants. Additionally, the type of lease, such as month-to-month, 6-month, or 12-month, should be included in this section. Finally, it is essential to reference the section of the existing lease agreement that indicates the terms surrounding rent increases and lease renewal details.
The proposed increase
This section may detail a variety of options that the tenant has for accepting the continued leasing of their property. In some cases, landlords offer only one option (usually a yearly lease), but many have different terms for different lengths of the lease.
Some of these terms are:
- Increase amount – A straightforward explanation of the proposed increase in rent from what the tenant is currently paying
- Current amount – This will show the amount that the tenant is currently paying, but you may also want to include some relevant information about the rates for similar properties in the area nearby. The reason for doing this is to help show the tenant that they may, in fact, have a fairly good deal set up with you. They may not want to move so quickly to leave if they know that they are getting a reasonable offer as it stands.
- Payment due date – The specific day of each month that the payment is due. Make sure to include any information about late penalties or fees that can be added on if the tenant pays late.
- Notice period – Describe again the amount of time you are giving the tenant to respond. This allows the tenant enough time to decide what they want to do.
This section may also include information on the different payment forms accepted and where tenants can pay, such as online, in person, or by mail. At the end of the notice, describe your willingness to respond to the tenant’s queries.
Closing
The closing should include the signature of the landlord, property manager, or property owner and the date.
Speak with your attorney to ensure property notification and response processes are within local laws and customs guidelines. The attorney can guide you through the timeline process and advise on how long to keep digital copies of such notifications and tenant responses.
Rent Increase Notice Template
Christine Chloe
15TH Street Avenue
House No. 13
Dear tenant,
This notice letter sent on [Date], marks the official notice of our intention to raise the monthly rent for the house you currently occupy at [House Address]. The landlord, Mr. Steve Branson, will affect the increment from the current [Current Rent] $359 to [New Rent] $400. The payment will be due before the seventh day of every month.
Kindly note that the new increment will be effective as of February 20XX. If at all you don’t accept the increase in rent under the terms of this notice, you can notify us through email by the latest date [Date] 31st December 20XX. After the deadline, no comments, views, or concerns will be heard. Also, be informed that all the initial tenancy agreements will remain valid even after the increment.
Thank you very much for being a responsible tenant. We would like you to continue with your tenancy.
Sincerely
Landlord’s signature
Date
How to Deliver a Rent Increase Notice
How a rent increase notice is delivered is just as crucial as what to include in it because if it is not appropriately delivered with documentation, it can be disputed that the notice was ever received. Therefore, it is imperative to prove that notice was given and received by the tenant. Additionally, sending a follow-up email helps provide a second layer of notification and response from your tenant.
Different states require different methods to be used to deliver it. Check local and state laws or consult with an attorney for the best way to deliver it to your tenants.
Different methods for delivery include:
Registered mail
Delivering a notice by certified mail with a return receipt is a preferred delivery method because there is proof that the tenant received it. Upon delivery, the tenant signs the receipt, and the receipt is returned to the sender stamped with the delivery date. Keep this receipt for evidence that your tenant received the notification forms.
Email is another method to deliver it in some states—only if the lease allows it. Email is a convenient way to send the notice, but it is difficult to 100 percent prove the tenant received the notification without specific email programs.
In-person delivery
Delivering the notice in person allows for confirmation that the tenant received it; however, this can put much pressure on the tenant. In addition, though it may not be your intent, delivering in person may intimate the tenant, which is not helpful when notifying them of the changes.
How to Determine the Rent Increase (for Landlord)
Consider the following when determining how to raise the rent:
Determine if the property is eligible
It is essential to stay informed about local and state limits on rent increase amounts and notification timelines. Confer with your attorney to determine how much of an increase the property is eligible for and other laws and restrictions regarding it. Additionally, there may be limitations on how much you can raise the rent if your tenant has a disability or if the increase is considered discriminatory under the Fair Housing Act.
If your property qualifies for Section 8, you must submit for approval before increasing the rate. You cannot raise it to punish an unruly tenant. Additionally, an increase cannot occur during the terms of an existing lease agreement.
Decide the new amount
When deciding on a new rent amount, the first thing to consider is what other comparable units are charging. Several online resources can help determine the current market rate for your property’s size, location, and amenities. These websites include Rentometer.com, Zillow.com, and Craigslist, all of which offer a way to see current monthly rental amounts based on the address of your property. Base your decision on the facts about your property compared to other properties, not what you think.
Check the current lease agreement
The lease agreement determines if and when a rent increase can occur. Most leases get signed for one year, and the amount remains at a fixed rate until it is up for renewal. However, month-to-month lease agreements may not have a specific end date but require the landlord to read thoroughly to determine if an increase is allowed.
Check for state-specific notice periods
As mentioned above, it is vital to check with your local municipal and state laws to see if there are any prohibiting raising the rent by a specific amount. Next, check with the laws to see the requirements regarding notice periods before the new rate goes into effect. For example, states like Arkansas and Washington require 30-day notification, while states like Georgia, Maine, and New York do not have any statutes regarding notice periods. Additionally, states such as Vermont and Delaware require 60-day notification of a rental rate increase.
Write and send the notice
Once you set the new rate, it is time to write the letter informing your tenant of the increase. The letter must be sent via certified mail with a return receipt to ensure the tenant receives the notice. Once delivered, the postal service returns the receipt to you, which should be kept in your records. Other methods used to send one may include email or in-person delivery.
Now it is up to your tenant to make an informed decision if they plan to renew their lease and pay the new rate, counteroffer, or move out.
How to Calculate the Rent Increase (for Tenant)
On average, most landlords increase rent by one or two percent per lease renewal to match inflation rates. Several factors can help you calculate how much of an increase to implement for your rental properties. First, check with local laws to ensure you abide by any stabilization regulations. Second, check the existing lease to see if any terms set how much of a raise is allowed. Make sure the laws and the lease have been verified.
Then consider the following factors to determine how much of an increment to implement:
- Current market prices for comparable rentals in the community
- How often do other properties implement increases in the community?
- Rate of inflation
Related: 9+ Sample rent increase letters
Frequently Asked Questions
In most circumstances, there is no set maximum cap for such increases. The only exceptions will be if the existing lease states a limit or the property is in a municipality with a cap set.
Include how you intend to collect the new monthly rent in the letter and the new lease. There are different methods to collect money online, such as credit or debit cards, and in-person or by mail using checks or money orders.
Unfortunately, as a landlord, there may be times when you have to decrease the rate for your properties. For example, it may be time to reduce it if the current local market is oversaturated or there is a severe decline in property values.
Sometimes the market does not justify an increase, nor does it indicate there should be a decrease. In situations where you want to retain your tenant or there is an economic downturn, you may want to consider keeping the rent the same for one more lease term.
To encourage your tenant to respond to the letter in writing, consider including a self-addressed, stamped envelope along with a response letter that the tenant can quickly fill out, sign, and date. If completing the form digitally, use a program that allows the tenant to fill in the information and sign the online document quickly.
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