Property Management Blog

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

System - Friday, May 24, 2024
Property Management Blog

The idea of raising the rent of your rental properties is a matter of when and not if. After all, the economy and the property landscape in the region are changing. With a change in living costs, you must be able to maintain your profit and also cater to the costs.

From our experience in the property industry, we believe that the matter in which you communicate the rent increase matters. That’s why we have put together this short guide. 

The team from SGI Dallas advises property owners on how to raise rent while maintaining the current leases.

The Rent Increase Letter

As the name suggests, this letter is put together by the landlord to inform the tenant of an intention of increasing the rent. It is not compiled from a ‘dictatorial’ point of view. 

It should be as comprehensive as possible detailing the reasons why the rent is being increased, the review rate, and any other pertinent details.

The rent increase letter also serves as a record of increasing rent. While you might want to take advantage of certain market factors, rent increase is also backed in law. 

County and State property laws dictate how much you can review the rent and also how many times you can increase rent within a certain period.


You can’t give your tenant a rent increase letter today and expect them to pay the new rent amount next month. There is a legal and binding lease agreement. 


The tenant is bound to pay the agreed-upon rent until the expiration of the lease agreement. This restriction applies should you have a one or three-year lease in place. 

The notice period depends on the State in which you reside and also the type of lease in place. However, as a rule of thumb, most notice periods vary between 30 – 60 days. Remember to stay up to date with the laws of the State before putting together the rent increase letter.

Landlords can take advantage of clauses in the rental agreement to increase the rent before the expiry of the lease. If a tenant signs a lease agreement with such a clause, you should be able to increase the rent after the notice period has elapsed. 

Don’t expect all tenants to sign such a lease agreement. In most cases, the tenant would sign upon consideration by the landlord to upgrade the unit and several amenities in the common areas.

How Much Can One Review the Rent?

This is the part where most landlords are interested in; how much can they increase the rents?

As mentioned before, county ordinances and State law play a key role in the regulation of rent and other property matters. You would have to refer to these laws. In some States, rent control laws apply and an increased ceiling percentage is in place. 


Should rent control laws not apply in your case, the annual rent increase is cited at between 3% - 5%. This number increases for more active markets where demand is higher than normal. For cities such as California and New York, landlords can increase rent by 5% - 10%.

Factors That Justify Rent Amount Increase

You just don’t wake up in the morning and decide to increase the rent of your property. There must be a justification behind it. Here are the more common reasons that will justify one:

  • Inflation: With the price of eggs skyrocketing, you are bound to be losing some of your hard-earned profit. If you’re not sure about the effect of inflation, just compare a typical basket of goods now and two years ago.

  • Property Improvements: This stands to be a key argument that justifies why you should increase rent. Enhancements to the unit make your property more attractive in the market. A rational tenant will more often than not accept a rent increase with this point as the basis of the argument.

  • Utility bills: In most cases, a third party is providing the utilities and services i.e. garbage collection, gas, electricity, and water. Should the prices of these utilities increase, you should increase your asking rent.

  • Property taxes: They say ‘Pay unto Caesar, which belongs unto Caesar.’ You can’t avoid paying rent, especially with the keen eye of the IRS watching over you. An amendment in the property taxes is a good justification for you to increase your rent.


How Should You Write a Rent Increase Letter?

We advise any landlord writing a rent increase letter to be concise and to the letter. You don’t need to write three pages worth of explanation. 

Once you have the tenant and rental property details set, you can use polite language to express your intent on the rental amount. The reason why you are raising the rent should come out clearly.

It is also important to mention that the tenant has the right to accept or reject the rent increase. If they are not accepting the increase, they should write a letter to you to that effect. Should they accept the increase, they can countersign and send the letter back to you.

You can always choose to download a template letter from the internet on the same. However, we would recommend a more personal touch to it. Your tenants will appreciate the gesture and would be more willing to reach out for a discussion on the same.

It is easier when you have a rental property management team helping you.


While we have tried to cover everything in this short article, there are a few important details that you still need to know. 

Property and tenant management is a vigorous process that needs you to be hands-on. For your Dallas property, rely on the team from SGI Property Management Dallas.

We are the property leaders known for our property expertise, experience, and stellar reputation. Get in touch with us today.