Although many landlords feel that if they raise their rent, their tenants may become angry or cancel their renter’s contract, there are many understandable reasons to raise the rent. From cost of living increases to property tax increases and more, there are many reasons that landlords raise the rent on their properties.
- The tenant’s special move-in rent has ended. If you advertised a special introductory rent for potential tenants, you may raise your rent amount once that certain time period (usually three months) has ended. Make sure to note this on the rent contract so tenants are well aware of the increase when it occurs, and they aren’t faced with a rude (and expensive) surprise!
- Property improvements or repairs. Everyone knows that repairs and improvements are costly, and sometimes this justifies the cost of a rent increase, especially when the tenant would greatly benefit from the repairs and improvements. This is also something to be stipulated on the renter’s contract.
- The cost of living has increased. Inflation and cost of living is one of the most common reasons for rent increases, along with property improvements and higher taxes. Landlords have to stay competitive with the rental market and keep their income at a place where it covers any rising costs.
- Tax hikes. This second common rent increase reason is because the landlord has to cover the cost of rising taxes to both their business and their property taxes, which can create a very large monetary burden.
- Neighborhood value improvement or gentrification. If the neighborhood that your property is located is suddenly being improved or gentrifying, the overall worth of the neighborhood will increase as well. Landlords must go with the value of the neighborhood to stay competitive with other landlords in the area to keep current tenants and snag potential tenants. This will also help them cover any property tax increases that may also come with the gentrification of the area.