Rent Increase Letter is one of the major headaches of many Landlords and Property Managers, people consult google every day to look for rent increase letter writing styles. But will you blame a landlord for increasing rent? no, don’t do that.
As a Landlord or Professional Property Manager, one of the ways to optimize your rental income is to increase your property rent over time, this is the only way by which you can keep your real estate investment in shape. In doing this, you need to understand certain rules and procedures to legally and professionally implement a “Rent Increase ” notice on your property.
When can you Increase House Rent?
Generally, professional property managers and landlords can increase property rent when a lease contract comes to an end, a rent can also be increased if it has been stated in the lease agreement clause. But Ideally, you can choose to increase your rent every three or four years. It is important to inform your tenant of the rent increase and give them sufficient notice to decide whether to accept it or not.
Factors to Consider when Increasing House Rents
Comparable House Rents in the Neighborhood
Before increasing house rent, it is important to carry out our comprehensive market survey on the going house rent in the neighbourhood. You can use various internet platforms / classified ads websites to check the going rental rate. This will allow you to analyze and justify a rent increase.
The Lease / Rental Term
Property Managers or Landlords should always send sufficient notices to their tenants concerning the proposed rent increase. Sometimes, the lease term usually determines when notices are expected to be sent. If you maintain an annual rental term, then it is important to give 1 year’s notice ahead, and if you maintain a monthly rental term, it is expected you give 1 month’s notice ahead. This will allow your tenant to decide whether to stay or find alternative property elsewhere.
Every rent increase should be fair and reasonable based on the comparable house rent in the neighbourhood. If the house rent is increased too much, the landlord may risk losing a great tenant.
Elements of a Rent Increase Letter
- Current Date
- Name, and address of the landlord
- Full description and location of the subject property
- The Lease End Date
- The Current House Rent
- The New House Rent Amount.
- The Date the Rent will take effect.
- Details on how the Tenant can accept or decline the increase.
Sample Rent Increase Letter
26th August 2023
Unit 1A, Ibugbe Luxury Court
NOTICE OF RENT INCREASE: TO TAKE EFFECT IN 2023 RENT RENEWAL
Concerning the above subject matter. Your landlord has instructed us to notify you that there will be a rental increase from next year. Your annual rent will now be N4, 000,000.00 (Four Million Naira Only) from your 2023 rental year and beyond.
Please, note that the increment is to account for the sudden rise in the inflation rates. More importantly, in line with the prevailing rents of similar apartments within the neighbourhood.
This rental increase decision is not reviewable as we manage this property as an investment portfolio. You may wish to decline the increase if you feel you cannot continue with the tenancy.
You are expected to send early notice of at least 6 months if you are declining the increase and do not want to continue with us.
We thank you for being a valuable and trustworthy tenant. We treasure the long-term relationship and support between us.
We look forward to a continuous relationship.
Maintaining a fair market rent is essential for healthy property management, it helps ensure the availability of funds to keep the property well maintained, attracting great tenants and ensuring a high-quality standard of living.
Following the process highlighted above for increasing house rent and showcasing market comparison will make the rent increase process easier and ensure that everyone involved understands one another.
Please do your due diligence, and seek the proper knowledge and advice before you embark on real estate letter writing. Never take this article as professional advice, you are responsible for whatever decision you make based on this post. Always consult the proper professionals if you need real estate business advice.
- I created bolajiafolabi.com to teach you about real estate and tech-based business opportunities. I work as a full-time partner at Globalclique, a Real Estate + Technology Consulting Company. I am also a CIO at Ibugbe and Partners, a Real Estate Marketing and Development Consulting Firm in Lagos, Nigeria.