No tenant likes to receive a letter telling them that their rent’s going to be higher, although it’s sometimes necessary to increase the rent for various reasons. This is especially difficult now, because of how deeply the COVID-19 pandemic has affected many people’s finances. If you as a landlord, or your property management company is increasing the rent, you may be wondering exactly how to write a rent increase letter. Here are some important points to remember:
Give tenants a notice 30 days prior
Legally, of course, you have to advise your tenants of the rent increase, and in most states, 30 days notice is required. The increase must be communicated in writing, and the letter can either be given to your tenant in person or sent by mail. It is important for you to know that they received it, so sending it by certified mail is highly recommended. A simple form indicating that the recipient does or doesn’t agree to the rent increase can be included for them to sign and mail back. Emailing the information is an option too, although the disadvantage is there’s no guarantee it will ever get read.
You can find templates online that outline what information needs to be included in a letter informing of a rent increase. Your letter needs to clearly include all the information that your tenant needs to know, including:
- The date of the letter
- The current rental amount
- The amount after the increase
- The date that the increase is effective
- The landlord or property management company’s contact information
- A reference to the original lease
Not all tenants will agree to pay higher rent, and in that case, the amount of notice needed by the tenant to move out should be clearly indicated. If they do agree to the increased rent, you’ll need to draw up a new lease. If the amount of the rent is increasing, you may find it necessary to increase the amount of the security deposit; typically, any extra amount would be due on the effective date of the rent increase.
State your reason for the increase
Although it’s not a requirement, it can be helpful to include the reason for the rent increase. It might be a problem with wear and tear on the property, an increase in the cost of city utilities and services, or perhaps the current rent isn’t providing enough income anymore, due to inflation. Whatever the reason might be, most tenants appreciate being told why they’ll be paying more. A letter that comes across as professional yet friendly often has a more positive effect than a letter that seems impersonal. Of course, your tenant also has the right to challenge any rent increase that they feel is unfair or illegal. Rent increases aren’t allowed during the lease term unless the lease indicates otherwise.
Your tenants won’t be very happy that their rent is increasing, and it’s not always an easy conversation, even if there’s a valid reason for it. However, like everything else, there’s a right way and a wrong way to do it, and knowing how to write a solid rent increase letter can help to ensure a smooth process and perhaps even happier tenants. Specialized Property Management in Dallas has a team of highly trained and experienced professionals that can help you handle such situations and keep both you and tenants happy.
