A Guide to Deal with Increasing Rent

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Editorial Team
July 19, 2023
Last updated:
March 11, 2024
A black board with "rent too high" scrawled across it.
Tip & Tricks


You have the challenging task as a landlord of maintaining renters in your rental while yet turning a profit. Rent should provide you with a little more money in addition to covering the costs of keeping the home. This frequently entails planning for recurring rent hikes.

Raising the rent is acceptable, but there are specific steps you should take to avoid losing your renters or having trouble finding tenants for your unoccupied home.

How much should rent rise year then? There is no precise formula, but there are several factors to consider that help you determine what to do.

Why raise the rent at all?

The regular costs of home ownership fluctuate from year to year. What you owe every year varies depending on factors including property valuation, taxes, and even mortgage interest rates.


Raising the rent is one of the simplest ways to preserve the investment in your rental property. While remaining competitive in your market, the rental rate for your house should cover a number of necessities, such as:

·        tax on real estate

·        Mortgage obligations

·        fees for management and insurance

·        servicing and repairing

Rent should include the cost of utilities if tenants are not required to set them up on their own. HOA dues are the same.

If you do not increase the rent to meet any of these escalating expenses, you run the danger of cutting into your own earnings.

A row of houses on the outskirts of London.

When to raise the rent

There are some periods when it is more acceptable to raise the rent than others, even if the typical yearly rent increase ranges from 3 to 5 percent of the entire cost. You do not only do this on the first day of the new year. By then, some renters will be halfway through their leases. The greatest time to raise rent each year is really when the lease expires.

If you only sign one-year leases with renters, you will know for sure that, at some point every year, you will be allowed to raise the rent if you choose. However, this might put you on an inconsistent cycle when it comes to raising rent. Additionally, whenever it occurs, this yearly rent rise will make sure you are never undercharging and will aid in maintaining your competitiveness in the housing market.

How to tell your tenant about a rent increase

A letter is the best approach to inform your renter of a rent increase. In most states, it is necessary. You should already be drafting a letter asking them about their future intentions when their one-year lease expires. Will they transverse? Do they want to remain? Will they re-sign a full-year lease or opt for a month-to-month arrangement?

When you are obtaining responses to these inquiries, be sure to ask how much the rent will rise throughout the subsequent lease periods. Make the increase more bearable for the tenant by breaking it down per month. For instance, if your monthly rent is $1,000 and you are increasing it by three percent, let the renter know that it will now be $1,030. Budgeting for $30 is far simpler than planning for the overall increase over the course of a year.

Tenants should get the letter including all this information long before the lease's expiration date. You do not want to move out or extend your lease too soon after the typical 30-day notice period from landlords, so don't do it. You should give them plenty of advance warning since your rent increase can influence their decision. It is advisable to give them notice about 90 days in advance.

A beautiful London flat that has recently been cleaned by the landlord.

It is OK to explain why

Raising the rent might seem odd if you get along well with your tenants and already know they will stay. Furthermore, even if it is up to you whether to have yearly rent increases or not, you are not breaking any rules. 

It is OK to justify your actions in order to make it simpler to ask tenants for more money. Inform them that your rent increase is within the range of 3-5 percent that is the national average. Tell them that you are being consistent by raising the rent by the same percentage as you have done for the last X years.

It is OK to even say that the reason for the rent increase is to keep you competitive in your neighbourhood. Since renting out a home is a business, most renters anticipate a little rise in rent each year.

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