As a property manager, navigating rent increases can be a delicate task, particularly at a time when the cost of living is rising all around. And while raising rent is a necessary part of maintaining a financially viable property, it's crucial to do so in a way that fosters trust and maintains positive relationships with your residents.
The key to this process? Transparency. By clearly communicating the reasons behind the rent increase and providing all the necessary information, you can ensure your residents understand the rationale behind the decision and feel valued as part of your community.
In the end, open communication fosters a sense of trust and respect between you and your residents. When residents understand the reasoning behind a rent increase, they're more likely to accept it and remain satisfied with their living situation.
Additionally, a positive resident relationship translates to lower vacancy rates, reduced turnover costs, and a more stable income stream for your property.
A note on language: Here at Second Nature, we prefer to use the terms "resident" and “residency” rather than “tenant” and “tenancy,” in order to emphasize the human element of property management work. However, there may be instances where terms such as "tenant" are used for legal or industry-standard purposes within documents or communications. In these cases, please know that our intent remains the same – to provide clear, accurate, and meaningful information to all people involved in the business relationship.
Key elements of a transparent rent increase letter
Here's what should be included in a rent increase letter to ensure your residents have all the information they need:
1. Resident information:
- Clearly state the names of the residents you're addressing.
- Include their address.
- Mention the end date of their current lease agreement.
2. Clear announcement of rent increase:
- Unequivocally state the effective date of the rent increase.
- Clearly outline the new monthly rent amount.
- If applicable, mention any changes to additional fees like pet rent, parking, or utilities.
3. Justification for the increase (transparency is key!):
- Highlight specific reasons for the rent increase. This could include rising property taxes, increased maintenance costs due to inflation or repairs, market value adjustments based on comparable rentals, or significant property improvements you've made.
- Be specific and provide data or evidence to support your claims whenever possible. For instance, mention the percentage increase in real estate property taxes or highlight the specific property improvements that are enhancing the resident's living experience.
4. Resident options (maintain a positive tone):
- Briefly remind residents of their right to review their new lease agreement.
- Express your willingness to answer any questions they may have regarding the rent increase.
- Clearly state your contact information (phone number and email address) for easy communication.
How to send a rent increase letter
Delivering a rent increase letter requires a balance between convenience and ensuring you have verifiable proof of the notification. First and foremost, you’ll need to consider local regulations. Ideally, consult with a lawyer specializing in landlord-tenant law to determine the mandated method for delivering rent increase notices.
Some states or municipalities may require certified mail or another verifiable method (e.g., signed delivery receipts with regular mail). Don't skip this step – non-compliance with local regulations can lead to legal issues down the line.
Delivery method options
- Certified mail: This is generally the safest option. Certified mail provides a receipt confirming the letter's delivery and the date it was received. This documentation can be crucial in case of future disputes or legal proceedings. It is typically more expensive than regular mail, but the added security it offers can be worth the cost.
- Regular mail with signed delivery receipt: This option offers some level of proof of delivery but may be less secure than certified mail. Residents can potentially refuse to sign for the receipt.
- Hand delivery: If feasible, handing the rent increase letter to the resident in person and obtaining a signed receipt is the most secure method.
Note that while some residents might appreciate the convenience of email, this is not always the most reliable notification method. Consider your residents' demographics and preferred communication channels.
In any case, the original lease agreement you have with your residents should explicitly state acceptable methods for delivering important notice letters, including rent increases. For instance, if lease terms include email as an acceptable form of communication, then you may choose to use it for rent increase notifications.
A note on property management software
Property management software can be useful for maintaining a centralized repository of all your communications with residents, including rent increase letters. It is also a useful tool for furnishing clear audit trails and documentation in case of disputes. Do, however, remember to make updates if the software handles rent collection reminders, in order to reflect the conditions of your new rental agreement.
Rent increase FAQs
Q: How many days’ notice of rent increase do residents need to be given?
A: The required notice period for a rental increase can vary depending on your location and the terms of your lease agreement. In general, most states require that residents be given 30 to 60 days' written notice before a rent increase takes effect (this can vary for year-to-year lease renewals vs month-to-month). It's important to check local rent control regulations for specific details on timeframes.
Q: Can the rent increase be contested?
A: Depending on your location and specific circumstances, residents may have the right to contest a rent increase. For example, rent control laws in some jurisdictions allow residents to challenge rent hikes that are deemed to be excessive (statewide in California and Oregon, or locally in New York, New Jersey, and Maine). It's best to obtain legal advice from lawyers specializing in applicable local laws and state laws to understand your options.
Q: What resources are available for residents?
For residents who ask about their rights or renting in general, here are some resources you can provide:
- HUD Tenant Rights: The U.S. Department of Housing and Urban Development (HUD) website offers a wealth of information on tenant rights, including resources on rent increases and eviction processes.
- Local tenant rights organizations: Many cities and states have local tenant rights organizations that can provide residents with specific guidance and support for renters based on their location and situation.
Sample rent increase letter template
Below is a template you can use for your rent increase letter. Simply customize the highlighted sections with your specific information.
[Your Property Name and Contact Information]
[Date]
[Resident names]
[Address of rental property]
RE: Rent increase effective [effective date]
Dear [Resident names],
This letter is to inform you of an upcoming rent increase for [property address], effective [effective date]. Your current monthly rent of [current rent amount] will be adjusted to [new rent amount]. Additionally, [mention any changes to additional fees, e.g., "the monthly pet fee will increase to $XX"].
We understand rent increases can be disruptive, and we want to be transparent about the reasons behind this adjustment. The increase is necessary due to [list specific reasons for the increase, e.g., "rising rental rates for comparable units… ," “neighborhood revitalization resulting in enhanced value…”]. [If applicable, provide data or evidence to support your claims].
We value you as a resident and appreciate our relationship. You have the right to review your lease agreement if you have any questions about its terms. We are also happy to answer any questions you may have regarding this rent increase. Please feel free to contact us at [phone number] or [email address].
Sincerely,
[Your name and the name of your property management company]
Final thoughts
Prioritize clear communication and transparency, and you’ll find you can navigate rent increases constructively, while ensuring a healthy and positive relationship with your residents.
Such communications are a unique opportunity for positioning with your residents by reconnecting on terms, updating expectations, and more. The way you compose these letters – and the way you position the changes – can make all the difference in your renewal rate and resident satisfaction.
It’s also the perfect opportunity to introduce a Resident Benefits Package (RBP) and remind residents of your role in adding value to their living conditions. Learn more about the benefits of Second Nature’s fully managed RBP.