Answer
Jan 24, 2025 - 03:35 PM
It's possible that your state or municipality requires you to provide an explanation of any rental increase, so firstly, ensure you understand your local laws. But even if that requirement is not imposed on you, we generally recommend that you do provide your tenants an explanation of your decision to increase the rent.
Why Provide an Explanation?
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Maintaining Goodwill: Turning over a unit is expensive. You want good, happy tenants that stay for a long time. Explaining and justifying a rent increase will help keep them satisfied.
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Reputation: Depending on your market, online reviews or word of mouth may be critical to your ability to attract renters. You don't want to behave in a way that jeopardizes your reputation.
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Transparency: Explaining the increase can build trust and reduce misunderstandings.
What to Include in an Explanation
- Market Comparisons: Mention if rents in the area have increased and by how much.
- Property Costs: Explain rising maintenance costs, property taxes, or other expenses.
- Improvements: If you've upgraded or plan to upgrade the property, explain how the increase contributes to its value.
- Legal or Business Obligations: Highlight any compliance or operational needs impacting the rent.
How to Deliver the Explanation
- Letter or Email: Provide written notice with the required details (e.g., new amount, effective date).
- Tone: Keep the language professional and empathetic, showing you value the tenant relationship.
- Timing: Give sufficient notice, as required by law and to allow tenants to prepare.
When It Might Not Be Necessary
If the rent increase is minimal or aligns with a pre-stated policy (e.g., annual increases tied to inflation), a simple notification might suffice.
This response has been provided by Innago, a partner of the American Apartment Owners Association (AAOA).
This response has been provided by Innago, a partner of the American Apartment Owners Association (AAOA).
