How to write Friendly Rent Increase Letter?

Before discussing the Friendly Rent Increase Letter, I want to have your attention on some important psychological aspects surrounding the issue of an annual rent increase.

Friendly Rent Increase Letter
Friendly Rent Increase Letter

Why would a Landlord search for the ‘Friendly’ Rent Increase Letter’?

While I was preparing for my another blog post about the rent increase, I came across this word ‘friendly rent increase letter’ on Google Search. Being a landlord, I was able to immediately connect to the concern of the landlord which would have prompted the search for friendly rent increase letter.

All landlords know, no tenant like the rent increase. So it’s always a challenge, how to increase the rent without annoying the tenant. If the tenant is paying the rent on time and taking good care of your property, the landlord feels obligated in some strange way and so feel pressured not to increase the rent. At the same time, if the tenant is not too good or a problem tenant, the landlord would have some anxiety about how to communicate the increase in the rent.

Hence, the landlord always remains in dilemma at the time of annual rent increase.

However, in my opinion, the annual rent increase is an important piece of the puzzle called the landlord success. Which I have discussed in another article on this website. (Yearly Rent Increase is The Must Thing for Landlording Success, Why?)

In this article, we are going to see the psychological aspect surrounding the rent increase.

Landlord And Tenant Relationship

As you know the landlord and the tenant is an ongoing relationship until the tenancy ends. In this relationship, the landlord maintains ownership of the property and the tenant has the right to use the property.

Because of the nature of this relationship, there are many chances or instances of unfriendly communications. Both the party has to keep working towards the working maintenance of this relationship. The tenant has to keep paying rent in time without breaking any lease conditions. The landlord has to keep maintaining the property so the tenant can have a reasonable enjoyment of the occupancy.

In short, both the landlord and the tenant have to walk on a tightrope to avoid the stress for this relationship to work.

The yearly rent increase is one of those instances when the anxiety in this relationship runs high. At the same time, it opens a very good opportunity for the landlord. The communication of rent increase at the end of the year would have a long-lasting positive effect on the relationship if done skillfully. And if you mess up, it may create a bad faith in this delicate relationship.

Related Article: How to assume professional’s Avatar so your tenants see you as a good landlord

So What should a Landlord do?

Let’s think about a tenant’s perspective.

You have to keep in your mind, all the tenants have the knowledge that the rent increases yearly. Some may know the technical reason behind it, some may not. What they would not like is to pay higher than what is the prevailing rent in the area after the rent increase. So you have to have solid proofs of what is going on in the market.

You also have to think, for most people moving out to another place is a pain in the butt. So if your property is in good condition and your location is popular, you may play around with the increase a little bit.

Once you have decided the rent increase amount, it’s important to communicate with the tenant in a manner, which does not create a bad faith.

Rent Increase Letter

Regular rent increase letter would include the followings –

  • Lease renewal information
  • Rent increase amount and the new rent amount
  • The date from which rent increase is effective
  • Instruction of the new lease to be signed or continuation of the existing lease
  • Instruction on how to communicate if the tenant is not agreeing to the new rent and vacate

Follow the guidelines of your jurisdiction. You state (or province in Canada) may have laws restricting your action on the rent increase. Check out the law. Some jurisdiction may have the specific forms which are to be used for the rent increase notice. Also, ensure you are giving enough notice period required by your state tenancy law.

Friendly Rent Increase Letter

You may either attach a separate letter explaining why the rent being raised along with formal rent increase notice.

The difference between the formal rent increase letter and the friendly rent increase letter is the language and tone. Your purpose is to communicate to your tenant that you care for them. You know the rent increase may impact their monthly budget negatively, but you are trying your best to keep it to the bare minimum. At the same time, it should be professional enough to tell that this is your business for profit and the rent increase is unavoidable.

The key is to have a tone that is balanced between reasonability and professionalism.

Sample text 1

As you may be aware the rent has increased in our neighbourhood because of the cost of factors affecting the rent (property tax, utilities, insurance atc.) have increased in the last year. I do value you as one of my good tenants and I also acknowledge you are keeping the property in good care. However, I have to cop up with the increased cost. After crunching some numbers, I have concluded that I would have to raise the current rent by $____. Starting from Jan 1st, 2019, your rent will be $______ per month.

Again, thank you for being a wonderful tenant! Please call me if you have any questions.

Sample text 2

I’d like to take a minute to let know you know that you have been a wonderful tenant. You have always paid your rent on time and I see you are taking good care of the front and backyard. I truly believe you are an ideal tenant for any landlord. However, as you know I have spent a good amount of money on the upgrades of the property in the last 12 months which has in turns benefited you. And I have no choice but to transfer some the cost to all my tenants. You share comes to $100 per month. Hence, your rent will be increased by $100 starting from Jan 1st, 2019. 

For your better understanding, I have attached some of the bills of my spendings. I hope you understand.

Please feel free to call if you have any question. 

You can write your friendly rent increase letter along with this line.

I hope this article helps you. Please share your opinion at the bottom in the comment section.

Happy Landlording!

2 COMMENTS

  1. Excellent tips! Thanks for the sample letters. Do you usually send examples of expenses? I’ve vaguely referenced property taxes and things of that nature when pushed but I’ve never offered to open up the books. That seems like it’s inviting too many more questions. As long as I know I’m within market rents, I have no problems increasing rents a little and tenants seem to understand/expect a little increase each year.

    • Hi there! Thanks for your comment.
      You are right as long as the rent increase is within the market rent, there is no issue. Regardless I remain prepared for arguments. In my experience, I have never come across a tenant who would really go into great details of the reasons for the rent increase!

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