When can you raise the rent?
There are three things you need to check before raising the rent:
- State law.
- Local law.
- Your rental agreement.
The law may set a maximum possible rent increase, referred to as rent control or rent stabilization. For example, local laws may limit you to a 1% increase on a one-year renewal and a 2% increase on a two-year renewal. The limits may be tied to inflation or set annually by a government agency based on economic factors.
The law also tells you if there is a minimum amount of notice needed to inform your tenant about the rent increase. Usually, for a month-to-month lease, a full rental period in advance is typically adequate notice. For an annual lease, 30 to 60 days before the end of the lease is common if you want to raise the rent ahead of a renewal or convert to a month-to-month term.
Your rental agreements may set additional limits or notice periods. For example, you might guarantee your tenant a maximum rent increase or a longer notice period than required by law. However, your terms generally cannot provide less rights or require tenants to waive certain legal protections. For example, you cannot ask a tenant to consent to a rent increase in excess of the amount allowed by law. If your city or state has strong tenant protection laws, you may want to ask a lawyer before issuing a notice.
What type of notice must be provided to tenants?
Rent Increase Letters generally need to be in writing. Even though some states allow verbal month-to-month agreements, a tenant can just say you never gave them notice.
Some landlords prefer to use certified mail, but this is not necessary. However, you should document how and when you send each notice. It is also a good idea to get tenants to sign a Lease Amendment or a new lease that acknowledges the increase.
Can tenants refuse or fight a rent increase?
A tenant can refuse a rent increase when it is higher than allowed by law or you did not give the required notice. If the rent increase is legal, the tenant can only negotiate with the landlord.
Your tenant may threaten to move out or show you comparable rents. You may negotiate, or not. If the tenant still will not agree to an increase, ask them to sign a Notice of Non-Renewal which will require the tenant to agree to vacate at the end of their lease.
Check your local laws to make sure you've given your tenant appropriate notice of your intent to increase their rent or to not renew their lease. If they refuse to move out, you may be able to evict them as a holdover tenant.
Do rent increases need to be based on market value or improvements?
Rent increases being based on market value or improvements may be a requirement under some rent control or rent stabilization laws. Otherwise, you can generally set any rent that you think the market will support. Some landlords like to show the added value prompting the rent increase, but you generally do not need to include information beyond the new rate and effective date.
Can rent be raised to motivate a tenant to move out?
You may want to raise the rent to motivate a tenant to move out. You can generally do so unless your reasons are discriminatory or retaliatory. If you are only targeting one tenant for a rent increase, you could end up facing a legal challenge to that increase.
It is considered discrimination if you base a rent increase on your desire to have a tenant move out because of their religion, gender, race, family status, or another protected characteristic. It is retaliation if you try to raise the rent because the tenant reported you to the authorities for a code violation or some other issue on the property.
If a tenant is simply difficult, such as making constant maintenance requests for things like burned-out light bulbs in their own units, you can generally increase their rent but may need to be prepared to respond to more complaints.
If you have questions about when you can increase the rent or the type or amount of notice you need to give in your area, reach out to a Rocket Lawyer On Call® attorney.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.