Property Management Blog

What You Should Consider When Creating a Rent Increase Notice Letter?

System - Wednesday, March 27, 2024
Property Management Blog

As a rental property owner, you would not be charging the same rent for a couple of years. The neighborhood might have undergone several changes increasing the demand for rental units in the area. You also need to consider the inflation and increase in living costs. 

The increase in rent is not that uncommon when you think about it that way. It also means increased revenue margins and possibly better ROI. Depending on how you introduce or present the rent increase to them, they might see the rental increase as a negative thing.

The experienced team from SGI Property Management have expertly handled similar scenarios in the past. How do you compose the rent increase notice letter in an efficient and positive way for both parties? Keep reading to find out!

The Rent Increase Letter

A rent increase letter is the document passed onto the tenant outlining the pertinent details of the rent increase. You should know that the rent increase doesn’t supersede the current lease agreement. 

For you to increase the rent, you must wait for the current lease agreement to come to its natural end.

The rent increase letter aims at:

-        Detailing the rationale. Why are you as the landlord raising rent? And by how much? This information will be part of the letter

-        Giving significant notice. Most tenants are operating with budgets where each dollar is catered for. For you to continue enjoying their patronage, you must give them ample time to adjust their financing.


In your research, you must have come about legal implications on rent increase. The law regarding rent increase varies from one state to another. You might encounter states whereby a landlord is limited on the frequency of adjusting rent and when they can do so.

Ample Notice

How much time is ample notice? We have come across this question several times from our clients. As we have indicated above, the first consideration is until the end of the current lease agreement. Depending on the type of lease and the State of operation, ample notice may vary between 30 to 60 days. 

This applies whether you have an annual lease or a month-to-month lease. While it is easier to apply the rent increase in the latter, it still has several drawbacks that come with it.

There are special clauses that you can introduce into your lease agreement that can assist you to effect the change faster. One can include a clause that allows you to increase the rent while the current lease is still in place. 

This will be effected upon signing of the agreement by the tenant. Most tenants agree to such a clause if the property owner promises some upgrades or renovations on the premises.

We recommend that you throughout check the applicable local and State laws to avoid any contravention of the laws.


Maximum Increase Allowed

The first consideration you should consider is the market. While you might want to enjoy the highest returns possible, the market is controlled by forces of demand and supply. You must check on the competition and perform a comparable analysis that informs your decision.

The second consideration is the law. What does the State say on rent control? Some states have rent control laws in place that limit the annual rental increase to between 3 to 5% every year. 

California has more liberal rent control laws that allow the landlords to increase by over 10%. However, in these states and circumstances, the rent increase letter must be sent significantly earlier.

As recommended earlier, the more information you have on the topic the better. Visit local authority offices as well as their websites. Alternatively, you can get in touch with a local service provider who can be able to advise you on how best to go about rental property rent increase.

Why Increase Rent?

The goal of the rent increase letter is communication. You want the tenant to understand your rationale. Tenants are also not blind to the changes in the market. And should you present your issues in a clear manner, your tenant should be able to accept the increase.


That said, these are some of the reasons that would warrant an increase in rent:

-        Inflation. You must have seen the cost of eggs in the local supermarket. Inflation can cut into your profit margin. And for you to maintain that ROI, you will need to raise the rent collected per month.

-        Higher Bills (utility and maintenance). Utility bills are set by third-party service providers and are outside of the landlord’s sphere of control. Your rental increase should match the ratio by which the service provider has increased the utility bill.

-        Property renovations and improvements. This is a solid argument that the tenant should be able to agree without much fuss. Have you added CCTV to improve security? Installed a new HVAC to each unit? These improvements increase the allure of the unit compared to other options in the area translating to increased rent.


The key to composing the rent increase notice letter is timing, execution, and empathy. When you put yourself in the tenants’ shoes, you come to understand the challenges that come about with renting and how best to create a win-win situation.

From the article, you must appreciate the challenges that come with rental property ownership and leasing. There is more than just rent collection, eviction, and maintenance of the property. Management is a very engaging task that requires a rental property owner to commit hours of their days to the task.

For the management of your Phoenix rental property, there is only one company that you should be relying on, and that is SGI Property Management Phoenix. We are the leading service provider in the region known for our expertise, professionalism, and accountability. 

Contact us today and receive affordable quotes!