How to Raise the Rent on a Tenant Without Complaint
Knowing how to raise the rent on a tenant and when is an important part of property management. It can be the difference between maintaining a good revenue and tenant downtime, which can be devastating to costs. Read our guide on how to do this correctly below.
Searching for an experienced partner to manage your rental property? Palmetto State Properties is known for their ability to manage, market and maintain rental properties in the greater Charleston, SC area. Contact us today.
Rent Increases Are Necessary
For landlords, raising rents from time to time is a necessary and unavoidable aspect of operating a profitable business, regardless of the size of the property or the number of units. Rent increases are simply good property management. A rent increase may be in order when:
- – The landlord’s costs, such as property taxes, utility rates, insurance premiums, property management fees, or variable mortgage interest rate, have increased
- – The landlord’s current rents are below what is standard in the local market for comparable properties
- – The increase is intended to offset the costs of significant repairs or upgrades
- – Inflation is increasing living expenses in general
How to Raise the Rent on a Tenant
Most tenants understand that rent increases are normal and to be expected. As long as they are not blindsided by an unexpected or unusually high rent increase, tenants are not likely to protest them.
Here are some best practices for how to raise the rent respectfully and in a way that will cause minimal complaints.
Keep the Increase Reasonable
First, understand that state laws and local regulations may limit the size and frequency of rent increases. In South Carolina and a number of other states, there is no cap on the amount rent can increase–although landlords can’t raise the rent during the fixed term of a lease unless the lease specifically permits that.
How do you know the increase you have in mind is reasonable? The ultimate test of reasonability is whether or not tenants complain or move out due to a proposed rent increase. But before you run that risk, check the market values in the neighborhood and see what other landlords are charging. A real estate agent or property manager can help you develop a list of comparable properties and the rents being charged for them. This will not only tell you whether the rent increase you’re considering is reasonable but also gives you proof to share with your tenants.
Give Proper Notice
Most states require a specific notice period, usually 30 days, before a rent increase. However, South Carolina does not. Still, best practice is to give tenants at least a month’s notice of an upcoming rent increase. Often any rent increase is indicated in a Lease Renewal Letter so that the tenant can make an informed decision about renewing the current lease.
Explain the Reason for the Increase
Tenants are less likely to take issue with a rent increase when they understand its reasons. Explain your rationale so that tenants don’t think the increase is a matter of greed or a lack of concern for their financial issues.
Maintain Good Tenant Relationships
It’s important to listen to what your tenants have to say, respond to their feedback, honor their requests for maintenance, and otherwise be a good landlord.
Tenants who see you as friendly and concerned about their comfort and well-being should regard you as trustworthy and accept your reasons for a reasonable rent increase. It makes good business sense to cultivate friendly relationships with your tenants, getting to know something about them as individuals.
Offer Alternatives
One effective way to help ensure you don’t lose tenants because of a rent increase is to give tenants something in return, such as a multi-year lease with lower annual increases than would be the case with yearly lease renewals. For example, a two-year lease with a single 3% increase rather than a one-year lease with a 2% increase for the first year and another 2% at the next renewal would save the tenant 1% over the two years.
Bonus: Our Expert Advice
As an experienced property management company, we have witnessed all of the ups and downs the real estate market has to offer. We frequently discover there is a trade-off between keeping a solid, punctually paying tenant and maximizing rent potential. It is sometimes in the owner’s best interest to accept less than market value in order to keep a good tenant and avoid downtime between occupants (ie. lost revenue). These sorts of nuanced decisions require experience or advice from experts, for help with your property management you can reach out today.
Forbidden Rent Increases
Be aware that most states have laws against rent increases that appear to be retaliation against tenants for complaining. This prohibition is usually enforced by requiring a certain amount of time since a tenant’s complaint before a rent increase can be imposed. South Carolina law does prohibit retaliatory rent increases, but it does not specify a time period between the tenant’s complaint and the rent increase.
Also, in every state, it’s illegal to impose rent increases that are discriminatory against individuals protected by the Federal Fair Housing Act. The Fair Housing Act prohibits discriminatory treatment of tenants or prospective tenants based on their age, race, gender (including gender identity), sexual orientation, religion, nationality or origin, familial status, or disability.
Get Help Today in South Carolina
When tenants recognize that they are being treated fairly, they tend to accept reasonable rent increases as a fact of life as a renter. But increasing rent is always a delicate balancing act. Experience and expertise can go a long way towards a successful move to a higher rent. Working with a property management company like Palmetto State Properties will give you access to experts in the industry who can help you navigate these difficult times. Get in touch today to find out how we can help.
