Yearly Rent Increase is The Must Thing for Landlording Success, Why?

The consideration of Yearly Rent increase is often an ignored or forgotten issue for many landlords, for mainly 2 reasons. We’re going to see why it should be on the list of top priority.

Annual Rent Increase
Yearly Rent Increase

Why Landlords tend to be reluctant or careless in increasing rent?

Reason 1 – It has been observed that rent increase rate remains slightly more than the inflation rate whether it’s regulated or not regulated. If your tenant is paying $1000 monthly, the increase would be in the range of 20-40$ a month. The rent increase would be a very modest amount like $10-15 per month, especially if your tenant is paying a monthly rent of $500-$600 (in small towns).  This monthly amount sounds like a small amount and does not catch the landlord’s attention.

Reason 2 – When you rental business performing great with the great tenants, you’d be reluctant to annoy the good tenants by increasing the rent. From the previous bad experience with problem tenants, the landlord tends to have a cautious approach with creating any disturbance with the good tenants. This is another reason why the landlord is reluctant in increasing rent.

Why it’s Yearly Rent Increase?

In The US and Canada, the legal rent increase is allowed only once a year. I have listed rent increase guidelines for some jurisdiction here. If you are a new entrant to the landlord business, you should check your state or province website for further information.

Legal Rent Increase Guidelines - New York, Ohio, British Columbia, Ontario
Allowable Rent Increase in some states of USA and provinces of Canada

The government does allow the increase in the rent by regulating it through rent increase legislation. In most USA states, there is no enforced limit to the rent increase amount by the government. The logic is that the market competition would guard the rent rates. In Canada, some provinces have enforced limits on the yearly rent increase amount by rent increase laws.

Related article: Canadian Landlords: Rent Increase Guidelines 2019 all Provinces

Think about the Increase in the Expanse

Think about the following items which you pay for while maintaining your rental property.

  • Property Tax
  • Utility Payment
  • Rental property insurance
  • Maintenance cost
  • management company charges

All the above charges increase because of the inflation and other reasons and you bear the cost of that increase. If you don’t get to increase the rent, you’d pay from your pocket. You see the logic why you have to increase the rent? Isn’t this a business for you and you have to make the profit?

Monthly rent increase is a small amount, But Yearly gain is significant

When you think about the monthly rent increase, it’s a small amount. It may not register in your mind as a significant change from the previous monthly rent. However, on the yearly basis, it is still a significant amount. For an example, a monthly increase of $20 equals to $240 yearly. More so, think about if you increase the rent year over year without a skip, what would be the monthly rent amount after 5 or 10 years. The cumulative gain of the disciplined rent increase year over year can be a big reason for your landlording success.

How to increase the rent without annoying the Good Tenant?

It has been observed that good tenant by definition is a reasonable person. The reasonable person would understand why a landlord has to increase the rent. He or she may have questions about the increase. Which you should be able to answer correctly and satisfactorily. Your approach should be professional. You should have the print out of the rent increase guidelines from your state to show to your tenant. In addition, you can have your increased bills of property tax or utilities, ready to show.

Where the rate of rent increase is not regulated, you should be able to provide the proof that the new rent amount after the increase is not unreasonable high compared to prevailing rent in the neighbourhood. Depending on the circumstances, you may give some discount on the rent increase amount to your good tenant to keep them happy.

What is friendly Rent Increase Letter?

While researching for this article’s query on Google, I came across the word Friendly Rent Increase Letter. I believe, there is nothing like a friendly rent increase letter. I’d say this from my experience. The content of the rent increase letter should be precise. The presentation of the letter should look professional. Explain the reasons(described in this article) to your tenant why you are increasing rent. If you are increasing it lesser than stipulated guideline, you can mention that as a reward for being a good tenant.

For the areas where the rent increase is not regulated, you can provide the proof in the letter that your rent increase still keep the rent cheaper for your tenant than or at the least equal to the other rentals in the neighbourhood.

Disciplined Annual Rent Increase will sell your property quick!

Think about the future when you would sell your property. If the property is fetching the rent fairly around the prevailing market rate, it would be a huge advantage to you from a marketing perspective. As against that think about the scenario, when you have a good property with a long-term tenant, who are paying the same rent which they were paying 10 years ago. It’s not going to sound attractive for sure. And this may potentially cost you dearly while selling.


Conclusion: Yearly Rent Increase is a very important part of the puzzle called landlord success. The whole process of communicating and ensuring the rent increase year-by-year adds an important attitude to the landlord psyche.

Hope This article is helpful to you. Please share your view in the comment section at the bottom.

Happy Landlording!



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