Professional Property Managers know how to Handle a Rent Increase
Property managers like Martin Feinberg have a duty to their rental property owners to make sure that the properties they handle are being rented at a fair market value. Sometimes that means that rent must be increased while the current tenant is still living in the unit. When that is the case, property managers need to proceed carefully and do all in their power to make sure that they don’t lose a trustworthy and dependable tenant in the process.
When a rent increase is inevitable, professional property managers understand that there are laws and guidelines that need to be followed to help things go smoothly. Most rent increases should be around 3-5% and come with a friendly letter to the resident that helps them understand why the rent increase is necessary.
Before raising the rent, property managers need to be aware of the laws and regulations of the area where they are managing properties. They need to know:
- Rules for rent-controlled housing
- How frequently you can increase rent
- If the lease allows rent increases during the term of the lease
- If there is a maximum limit for rent increases
- How many days notice you must provide
Typically, landlords can only raise rent when a lease expires, unless the lease includes the ability to raise the rent in the middle of the term. They must give a written notice of a rent increase, which is usually a 30 days minimum. Though in most states and in most situations a property manager may increase the rent as much as they choose, they need to be wary of alienating tenants. A property manager cannot increase the rent to retaliate against a difficult renter.
When writing a rent increase letter, property managers need to inform the tenant of what is taking place and also officially document the rent increase for their records. The letter should be professional and to the point but also kind and respectful. Because money is almost always a sensitive topic, property managers should try to convey a sense of empathy and present reasons that the tenant should stay despite the extra cost.
Experienced property managers will know that they should use the tenant’s name, and be clear throughout the letter that the tenant can contact them at any time with questions or concerns. They also know that they should thank the tenant for being their renter and sign off using a personal closing such as “sincerely,” “thank you,” or “all the best.”
Rent increase letters should be concise but it can be very helpful to provide a short explanation on why the rent is being raised as well. Tenants appreciate transparency and understanding why rent is going up can make a difference between a tenant that renews the lease and one that decides to leave.
Some property managers like to treat rent increase letters like a contract, and will include a form at the bottom for the tenant to complete and return. Such a form should allow the tenant to formally agree to the new monthly rent or to disagree and provide a move-out date.
Property managers should always make sure to send a rent increase letter in a way that enables them to track whether or not the tenant received it. There should be no confusion later on what the tenant was aware or not aware of.