Steps to Raise a Yearly Tenant's Rent

Pros and Cons and Sample Rent Increase Letter

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Steps to Raise a Yearly Tenant's Rent. sturti / Getty Images

There are certain procedures a landlord must follow if he or she wants to raise the rent on a tenant with a yearly lease. Failing to follow the proper steps may invalidate your rent increase. Learn the reasons and risks of increasing a tenant’s rent and view a sample rent increase letter.

Reasons to Increase a Tenant’s Rent

  • To Keep Up With Fair Market Rent- Rent prices in your area may have increased since you originally signed the lease with your tenant. Since rental prices have increased, if your current tenant refuses to accept the rent increase, odds are there will be another prospective tenant who will be willing to pay the higher price.
  • An Increase in Expenses- Another reason to raise a tenant's rent is to be able to pay your own bills.You may have had an increase in operating expenses at the property, such as higher utility bills or property taxes. You may have no choice but to raise a tenant's rent to keep up with increased expenses,
  • You Have the Legal Right To- You may decide to raise a tenant's rent because it is your legal right as a landlord to do so.

Risks of Increasing a Tenant’s Rent

  • Tenant Moves Out- The biggest risk of raising a tenant's rent is that the tenant decides to move out and not renew their lease. You will then have to deal with vacancy costs and finding a new tenant.

When Can You Raise the Rent?

If a tenant has signed a lease agreement with a fixed term, such as a year, the rent price listed in that lease is valid for that year. If a landlord wants to increase a tenant's rent, he or she can only do so once the original lease term is over. You will likely have to send the tenant notice informing them of rent increase before the lease term expires.

Providing Written Notice

Most state landlord tenant laws require you to notify a tenant of a rent increase in writing prior to raising their rent. This letter must be sent before the lease term ends. How far in advance you must send this notice will vary by state, but it is generally sent between 15 and 60 days prior to the lease termination date. 

Some laws actually allow a landlord to raise a tenant's rent during a fixed-term lease agreement. To do so, the lease must clearly state that the rent may be raised during the lease term.

How Much Can You Increase the Rent By?

If you have a rent controlled unit, you can only raise a tenant's rent by a certain percentage each time you increase their rent. Some states will also put limits on rent increases even for units that are not considered rent controlled. Even if your state does not limit the amount you can increase a tenant's rent by, if you raise it too much, you increase the likelihood of a tenant moving out to find a cheaper apartment.



TO: Insert Name of Tenant

     Insert Address of Tenant

     Insert Unit Number

1. Purpose of Notice: This Notice is to inform the Tenant that the Landlord will be increasing the Tenant’s rent. Beginning on, Insert Date of Rent Increase, the monthly rent for the unit you currently occupy, Unit Insert Unit Number, which is located at, Insert Property Address, will be increased to Insert New Monthly Rent per month. The Tenant’s current tenancy will be terminated on Insert Termination Date as per the term of the original lease agreement.

The Tenant is being offered a new lease at the new monthly rent of Insert New Monthly Rent. This change and any other reasonable changes can be found in the Tenant’s new lease agreement.

2. Termination of Tenancy: The Tenant’s tenancy will expire on Insert Date Current Lease Expires. If the Tenant does not agree to rent the unit at the increased monthly rental price, the Tenant and all occupants of the unit must vacate the unit by Insert Date Current Lease Expires. The Tenant must adhere to all move-out procedures, including leaving the unit broom-swept clean.

3.Acceptance: If the Tenant agrees to rent the unit at the increased rental price of Insert New Monthly Rent, per month, the Tenant may remain on the premises, but must sign and adhere to the terms of a new lease agreement at the agreed upon monthly rent. By remaining in the property after the termination date of the original lease agreement, the Tenant is agreeing to the increased monthly rent and to adhere to any other reasonable changes to the lease agreement. This rental payment is due on or before the 5th day of each month.


Landlord Signature:______________________