Landlord Help: Raising the Rent Without Lowering Opinions

The holiday season is upon us, which means that the new year is right around the corner. For income property owners, that often means it is also lease renewal time and many rental property owners may see this as the perfect time to adjust rental fees for the coming year.

Annual rental increases may be common, but they are not always well-received by tenants, which is understandable. Frankly, no one likes to pay more for… well, anything! If you’re a landlord who is looking to up your rental fees, what can you do to make sure that the increase doesn’t put a damper on your landlord-tenant relationship or, worse yet, put an end to it?

As with most things in life, honesty is the best policy when it comes to raising the rent on your tenants. Make your increase intentions well-known in advance and help your tenants to be more receptive to the new rate by asking (and answering) these five questions:

How have my property maintenance costs increased? Each year, property taxes, utility fees and other maintenance costs fluctuate. If you find and share that your annual property costs have risen, your tenants are likely to understand an increase in their fees as well.

How do my rental rates compare to other available properties? If you haven’t already looked, scour the local listings to see how your rental unit or units compare to others that are available. Are your rates lower or higher than other comparable properties? Do you offer more or less amenities? Knowing what rental fees other landlords are charging for similar properties will help you to decide what increases are fair for your own properties.

What is current rental market demand? If there is a high demand for rental properties in your area, your tenants are more likely to understand and accept an increase to their fees. Even if they may not like the increase, it is likely that your current tenants won’t want to deal with the hassle of finding a new place to live.

When is the last time I raised the rent? Maybe you adjust your rental fees annually or maybe your rate has remained stagnant for years. Either way, letting your tenants know when the last time you raised the rent was may help them to accept an increase. However, before you determine your increase, make sure that your current lease agreement does not prevent it. If the lease language does not accommodate the increase, be sure to include more specific language in your new lease agreement.

How much do I value my current tenants? If you have long-term tenants who take care of your rental unit like it is their own, consider what it might be like to lose them. Although this is the worst-case scenario, it is something you need to be prepared for, just in case they do not respond well to a rental increase. However, if you’ve checked the market demand and you know it is likely that you’d be able to quickly fill your property, this may not be an issue for you.

Obviously, communication is key when it comes to disclosing a rental increase to your tenants. Let them know your plans to increase their rate as early on as you can, so that they are prepared for the new rate. Ensure that the rental increase aligns with the terms of your lease and keep the process structured, so there is little room for negative feedback.

Finally, if you’re able to increase the rent by small amounts and make your tenants well-aware of what is coming, they are likely to be more receptive to paying more for your property.