A rent increase letter is simply a statement that you, as the landlord, will increase the tenant’s rent. However, there are some legal concerns to take into account.
It is important to know that you can only increase the rent on a tenant after the end of a lease agreement. If the tenant has signed a 2-year lease, you may not raise the rent on the tenant during that 2 year period. If the tenant is on a month-to-month lease, then you may not increase the rent until the end of the month.
Each state has different laws regarding the time period for notification, but it is important for courtesy and bargaining reasons to allow the tenant as much time as possible to consider the rent increase. If the tenant is month-to-month, then let them know as early as possible in the month; if their lease is longer, then give them at least 60 days (2 months) to consider your proposed rent increase.
If you have a good tenant, be prepared to not increase their rent if they wish to stay. They may ask to bargain with you in order to remain on the property, and a good tenant is always worth bargaining to keep.
How does a Rent Increase Letter Work?
Rent increase letters are important methods of record-keeping, and although there are some state differences, these letters most often apply to landlords who:
- Need to inform their tenant of a rent increase.
- Need to inform the tenant that the local/state laws allow for a rent increase.
- Want to keep a record of communications with the tenant, particularly regarding finances.
Most cities and states allow landlords to increase the rent after the lease period is up, provided the landlord gives the tenant information regarding why they chose to increase the rent – increased property taxes, water/sewage/garbage costs, etc.
When is a Rent Increase Letter Invalid?
As a landlord, you must state in the rent increase letter when the new rent will be due – this confirms the end of the lease agreement between you and your tenant, as well as informs them of changes to the lease should they wish to resign with you.
Generally, month-to-month tenants do not need to re-sign a new lease agreement, and paying the new rent increase is legally an implicit agreement to the rent increase between you and the tenant. If the tenant requests a discussion to bargain about the rent increase, some states require that you honor that, and some do not.
Sometimes, a rent increase letter is included with an eviction notice. State laws vary greatly regarding eviction notices and their legal ramifications for landlords and tenants, so be careful if you choose to pursue this with a problem tenant. You may not legally be able to include these two notices together in your city or state, so read your local laws carefully, and consider consulting an attorney regarding eviction notices.
Rarely, some states allow a verbal agreement to a rent increase, but verbal agreements rarely hold up in court, so a discontent tenant could sue you even if they begin paying the rent increase. Without a paper trail, you could be stuck without legal recourse.
You may never use a rent increase in a discriminatory manner, to force a tenant out of your property because of their race, religion, or sexual orientation.
You must be sure to give the tenant an appropriate amount of time to become informed about the rent increase. This means at least 20 days in some states, if the tenant is month-to-month, but read your local laws carefully, because the notification period even for month-to-month renters could be greater than that.