Sometimes, being a property manager absolutely sucks.
On the clock 24/7? Not fun.
An endless stream of repetitive emails, texts, and calls to respond to daily? Annoying.
And don’t get me started on problem tenants…
Still, high up on the list of worst things about being a property manager: writing rent increase letters.
Notifying tenants that their rent is going up is hard, especially when you have long-term positive relationships with them. But it’s an inevitable part of the gig.
So, you have to learn how to do it the right way.
In this article, we’re breaking down the ins and outs of how to write a rent increase letter. Keep reading to learn more.
Hint: if you want to streamline your rent-increase notification process, scroll to the end for an insider solution.
Frequency and Timing for Rent Increase Letters
In short: you should write a rent increase letter each time you increase the amount of rent a tenant is paying.
But, like everything in the world of property management, it’s more complicated than just that.
Each province and state has different tenant protection laws, and many of these revolve around rent increase regulations. For example, B.C. landlords can increase rents by 2% maximum in 2023. And rent increases can only occur once in a 12-month period.
In Ontario, landlords can raise rents by no more than 2.5% in each 12-month period.
Before you consider increasing the rent, make sure you’re in compliance with your local and federal tenant laws. Otherwise, you could be getting yourself into a heap of trouble, not to mention breaking the trust of your tenants.
Whether or not you choose to raise the rent to the maximum allowable amount each year or not, there are a number of factors that could contribute to your decision. You can choose to include these in your rent increase explanation, especially if you want to show your tenants why you have to raise the rent.
Inflation, high utility costs, building maintenance, renovations, or property taxes are all common explanations for rent increases.
Writing Effective Rent Increase Letters: 5 Steps
Now that you’ve covered your legal and ethical bases, it’s time to get into the tough stuff: writing the actual letter.
It’s a lot like walking a tightrope, where you have to delicately balance the cold hard facts on one side with compassion and empathy on the other.
Here’s what you need to know.
Essential Components of Rent Increase Letters
Before you get into the fine art of writing the letter, make sure you have all the required details.
Required Information for Your Letter:
- The date you provided the letter to the tenant
- Your name and address, or that of the property manager
- Your tenant’s name and address
- The lease dates
- The date of the rent increase
- The amount of the rent increase
- The tenant’s options and next steps
Clarifying Terms and Tenant Response Instructions
Next: lay out the specific terms. The fine print.
You’ll need to provide your tenants with clear instructions for what to do after they receive your notice. There might be specific instructions from the government—such as mandatory confirmations—or you may have your own preferences for how tenants respond.
Regardless, make sure you list the exact steps tenants must take after receiving their rent increase.
Explaining Rent Increases to Build Trust
Okay, here’s where things get more complicated.
Everything up until this point has been mandatory. But now you have the opportunity to add something personal.
It’s worth noting that this is in no way required. You can absolutely send a basic, down-to-business rent increase letter that simply states the facts and nothing more.
You can. But you shouldn’t.
Put yourself in your tenant’s shoes: they want to know why they’re paying more. And, as listed in previous sections, there are plenty of valid reasons for rent increases. So be sure to include a brief explanation of why the changes are occurring.
Also, consider adding in a bit of gratitude. Thank the tenant for their time with you, and let them know you appreciate them. Everyone wants to feel appreciated! Adding this into a rent increase notice template can help soften the blow and improve your overall relationship with the tenant.
Including Contact Details for Tenant Questions
Finally, make sure your tenant knows where and how to contact you.
Consistent, healthy communication between property managers and tenants is a leading way to build good relationships, so be sure to prioritize honesty and transparency during these interactions.
Complete Rent Increase Letter Template
Once you have all the details in order, the rest of the letter will come together like pieces of a puzzle. Here’s a template to get you started:
[Your contact information]
[The date the letter was provided]
Dear [Tenant name],
We are writing to inform you of our intent to increase the cost of rent at [tenant’s address] from [previous rent amount] to [new rent amount]. As your annual lease term is coming to an end on [date of previous leasing term], this change will come into effect on [date of rent increase].
[Explanation for rent increase]
[Expression of gratitude for your tenants]
You may accept the terms of this increase by responding to this notice via email. If you choose to reject the new lease teams, your lease will expire at the end of your contracted agreement on [end of lease date].
If you have any questions or concerns, please feel free to contact me at [contact information].
Warm regards,
[Your signature]
Automating Rent Increase Notifications
And now for the insider solution…
Want to know how you can automate and streamline this difficult task?
Meet Leasey.AI property management software.
Leasey.AI is a property management software platform designed to help property managers reduce their manual workload by up to 70%.
If those numbers sound too good to be true, don’t worry. You don’t need to take our word for it. Check out our property management automation case studies.
One of our clients—a Victoria-based operation with over 1000 doors—was struggling to keep up with 80+ manually dispatched rent increases each month. With Leasey.AI, the client created a custom template and inputted rent increase dates. Then the platform did the rest of the work, automatically filling and distributing notices to tenants on the right days.
The results were astronomical: the client saw a whopping $24,000 in annual cost savings by automating this task alone.
Regardless of your situation, I’m confident Leasey.AI can make your life easier. Book a demo with Leasey.AI today so I can show you how.