No matter how equitable and understanding their relationships might be, there is almost always a degree of tension and conflict between landlords and their tenants. After all, it should go without saying that no tenant will ever be happy about paying rent, let alone paying increased rent.1 This is money that could be going towards other things, so increased rent costs have a direct impact on tenants’ financial security and livelihoods. Of course, on the other side of the coin are landlords, who rely on rent for their own financial security and livelihoods. This often leads to tension and a conflict that necessitates a winner and a loser of the landlord-tenant arrangement.

This competitive approach to landlord-tenant relationships, especially with respect to rent payments, breeds only losers. Distrust, disagreements, lack of communication, and lawsuits are not conducive to good business or stable living conditions. Thus, it is in both parties’ best interest to communicate and cooperate to promote their needs and to compromise.

This begs the question: how can a landlord expect mutual beneficence or agreement when it comes to raising rent, especially during this period of economic strain? Obviously, no tenant is going to be happy to hear that they must pay more each month, not the least of which because the situation is in the landlords’ interest first. As such, landlords have the burden of clearly communicating with their tenants and progressing the conversation to a successful shift.

Why Raising Rent is Inevitable and Imperative

Even when they aren’t dealing with the financial impact of a global pandemic, many landlords are hesitant about raising rent. There is a fear of rocking the boat with a loyal tenant, that asking for a rent increase when it comes time to renew the lease will end up chasing people away rather than convince them to pay more.2 However, despite the potential pushback from tenants, the fact is that sometimes the boat needs to be rocked.

The fact is that landlords have expenses that need to be paid, and when those expenses increase, rent must increase as well. Increasing property taxes (and the multitude of other expenses) can quickly diminish landlords’ investment returns, forcing them to increase their profits via raising rent.3 If landlords’ expenses increase while rent (their primary form of profit) remains the same, landlords will not be able to pay them. Changes in the market, therefore, necessitate changes in lease agreements.

Finding the Right Balance

When planning a rent increase, landlords must walk a fine line between reasonably raising their rent and forcing their tenants to move out. The fact is that some price points will fall outside of what a tenant can reasonably pay, some landlords must remember that maintaining their business must be prioritized over a rent increase that long-term and loyal tenants cannot afford. After all, it is far easier to lose a loyal customer than to bring them back into the fold. Before making any kind of increase to your rent, consider how your tenant will react to a particular price.4

When it comes down to it, tenants want a price that is affordable, fairly reflects the value they receive, and makes sense given the neighborhood’s real estate market.5 As such, you’ll need to do proper research to ensure that you are able to compete with current market prices, with as little tenant turnover as possible.6 This means balancing your rent prices so that they can help you earn a reasonable profit while still be reasonable for tenants based on market expectations and their specific needs.

Keeping Tenants Happy

While planning out future rent increases, it is important for landlords to take certain steps to mitigate potential conflicts with tenants. Before raising rent, landlords should do the following:

  • Conduct Research: Know your local real estate, along with your state and local landlord-tenant laws, especially those regarding raising rent.
  • Communicate With Tenants: Prioritize clear, considerate communication and cooperation with all of your tenants.
  • Develop a Convincing Argument For Why Rent Needs To Be Raised: Tenants will be more willing to accept a rent increase if you can explain why its needed. Consider factors such as the prices for similar units or increased expenses that you need to cover.
  • Consider Tenants’ Perspectives: Can your tenants realistically pay the amount you plan on charging?
  • Give Proper Notice: Before any rent increases are made, give a written notice warning tenants sufficient time before the end of the lease.
  • Prepare To Make Compromises: Know what you’re willing to compromise and what needs to be done.

At the end of the day, tenants who like their landlords are more likely to renew their leases and agree to a rent increase. If you are responsive, easy to work with, and make the rental process simple for your tenants, they will be more inclined to continue renting with you.7 Raising the rent does not have to be as conflict-ridden or complicated as it has been for landlords and tenants in the past. A careful and considerate approach will allow for landlords to achieve an outcome that is (good for tenants) but competitive (good for landlords).8 That said, we at CCSK Law, LLC recommend that landlords carefully consider all of the necessary factors above before deciding to increase the rent and to communicate this adjustment to their tenants.

In our next blog, we’ll talk about how to determine how much you should raise your rent!


Endnotes

1.  Collatz, A. (2017, March 7). How to Raise Rent Without Complaints. SmartMove. https://www.mysmartmove.com/SmartMove/blog/how-raise-rent-with-no-complaints.page.

2.  Manolas, K. (2021, April 21). Best Tips and Tricks For Setting an Effective Rent Price. Avail. https://www.avail.co/education/guides/complete-guide-to-finding-tenants/best-tips-and-tricks-for-setting-an-effective-rent-price.

3.  Manolas, K.

4.  Manolas, K. (2021, April 21).

5.  Manolas, K. (2021, April 21).

6.  Collatz, A. (2017, March 7).

7.  Manolas, K.

8.  Manolas, K.

About the author

Author profile

Isaac Isaiah Carr, JD MBA is founder, CEO, and business attorney of CCSK Law, a kingdom-driven law firm. Launched 5 years ago, CCSK Law grew from a single member firm to a 10 person team. His areas of focus include business formation and strategy, contract writing, sales, and corporate finance. Often referred to as an entrepreneur with a law degree, Isaac is able to offer business strategy utilizing creative solutions guided by legal and accounting principles that are then well executed in law. Experience in a variety of industries including real estate, hospitality, automotive, e-commerce, professional services, and healthcare. Successfully negotiated and closed multi-million-dollar transactions, ranging from $1.8M to $10M, with private investors, corporate leaders, and municipalities. Ultimately, he builds sustainable structures for systematic growth. Graduated from Valparaiso University Law School summa cum laude with his Juris Doctorate as well as the AACSB-accredited Valparaiso University School of Business with his Master’s in Business Administration. Passionate about education in all forms, Isaac is involved in the nonprofit organizations of SCORE, Neighbors’ Educational Opportunities (NEO) and New Vistas High School, ValpoNext, and Music Neighbors.

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