A rental increase is an inevitable part of leasing. However, the only downside is that you can lose great tenants. As renting is mostly due to affordability, rental increases can most definitely ice people out, forcing them to look elsewhere.
We understand that you’re running a business, but you can increase rent without losing tenants each time.
Do Your Research
Doing thorough research into the local market is arguably one of the most important steps to carry out. You don’t want to price too low and see little return on investment and you don’t want to price too high as it could ice out a lot of potential tenants. Pricing your rental too high or too low doesn’t give prospective tenants the best impression and you can easily appear to be inexperienced unless there is a specific reason for the disparity.
Be Firm, But Fair
It’s important that you are understanding of your tenant’s personal and financial situation, but also stand your ground. Good landlord-tenant relationships can take time to build, and you want to avoid burning bridges unless absolutely necessary. Be sure to put across how much you value them and be transparent about the reasons for the increase. More than anything, tenants appreciate transparency and efficiency.
Give the Tenant(s) Ample Notice
Finding a place to live is usually a stressful experience, so giving your tenant ample notice is vital. Should they decide that they want to move following the rental increase, it’s good to give them enough time to get their affairs in order. Additionally, it’s best to communicate the rental increase as early as conveniently possible. As an example, communicating that the rental increase will be in three months’ time.
Communicate in Hard-Copy & Digitally
Having both a hard-copy and a digital copy is vital in all communications for security and verification purposes. It is also easier for you as a landlord to keep track of your communications. It would also be more difficult for either party to claim that they “weren’t aware” of something or a certain letter or email “got lost”.
Consider Adding a Rental Increase Clause
Adding rental increase clauses in your initial agreement is also an option to consider. However, do note that this may put some prospective tenants off. Communicating this transparently in the initial rental agreement, outlines increases in a clear and concise way. This is so that tenants can expect it further down the line. This may also allow them to prepare financially for such an increase. This option would require a bit more research into the local market in the initial stages.
For more of our posts, have a read of our previous blog about how to write a mind-blowing rental listing!