When you own rental property you are faced with decisions about increasing rent on your tenants. Many landlords resist raising the rent, however, due to fear of tenant reaction or vacancy. Landlords do have to balance the financial benefits of raising rent over keeping a good tenant who pays their rent on time and doesn’t cause any issues. Most landlords do not raise the rent on a whim and only do so when there are underlying reasons. Common reasons for raising the rental price include an increase in property taxes or utility costs, the need for maintenance or remodeling and/or changes in the local rental market.
No matter how legitimate the reasons, there are best practices that should be used to raise the rent without losing good, long-term tenants and damaging a successful landlord/tenant relationship.
Top 5 tips to raise the rent on your rental property without losing tenants
Know your renters: one of the best things a landlord can do is to know and understand their tenants. Knowing how a tenant reacts to negative information in general allows a landlord to approach the subject of a rent increase in the way that is least likely to create an argument. On the flip side, when a tenant knows their landlord they will view a rent increase as coming from a person who they can talk to about the reasons.
Understand the Law: there are legal concerns to keep in mind when increasing a tenant’s rent such as legal limits on how much and how often rent can be increased on a property. Before a landlord or property owner increases rent he or she should be certain that the increase is following the law.
Prepare the evidence: a rent increase should be based on solid reasons. When increasing the rent on a tenant there should be documented reasons for why the increase is needed. Providing a letter outlining the financial or market changes that have occurred that justify the increase is best practice.
Be open to questions and feedback: Being there to listen and answer questions makes it more likely that your tenant will accept the increase. An explanation humanizes a rent increase and makes a tenant far more likely to work with a landlord.
Promise stability: a common reason tenants leave a property is due to perceived instability. If they believe a landlord increases the rent randomly and without warning, they are likely to vacate a property. Remember rent increases affect tenant finances so when increasing the rent promise there will be no further increases for a set period of time by offering a new rental contract.
Rent increases are sometimes unavoidable and are required due to the various reasons. It is entirely possible to increase rent without losing tenants provided a property owner is open about the process and willing to share information with their tenants. By approaching the increase in a professional and organized way, tenants are far less likely to react badly.
Son-Rise Property Management has been serving the property management needs of Bellingham and Whatcom County since 1996. Contact us today to see how we can help you find a rental property for your family or manage your rental properties.