If you are a landlord, the question of whether to increase your existing tenants’ rent can be a tricky one. While it is important from a business perspective to stay current as far as market trends, and increases in inflation and cost of living are concerned, a rent increase can have certain undesired consequences. Read on to find out more about the factors you should consider if you are thinking about a price hike on your rental properties.
Don’t do it just to do it
It’s normal to consider raising the rent on a property when the yearly lease is up, but it shouldn’t be automatic. You need to consider the fact that even a small change in rent can make a big difference for a tenant, and if this difference makes other available properties more attractive, you may be looking for new tenants before you know it. This can come with costs, like a void period where your property is empty and you are not collecting rent, or the fees associated with a new tenant moving in.
So be smart about raising the rent. Make sure it coincides with a general upward trend in the market. If you can raise the rent while keeping your property the most attractive option for the person who already lives there, it's highly unlikely they will move out.
Also, never forget the value of a good tenant who is responsive, pays the rent on time and takes care of your property. These are the ones you want to keep, and they may deserve a slightly lower rent than you would otherwise charge.
On the other hand, don’t be shy!
Rent hikes are, after all, a natural thing and to be expected by anyone and everyone living in a rental property. While they may not be welcome news to tenants, they don’t have to cause a major upset either.
With that in mind, remember that small regular rises in rent are preferable to occasional significant hikes. If your tenants see their rent go up a little bit each year, they are less likely to get angry about it and/or move on, than if they suddenly get a huge rise in what they are paying for the rental property where they have lived cosily and happily for five years.
Keep things cordial
If you have decided to raise the rent, you should be tactful about how you go about it. While it is a normal thing, the politics of it can be delicate.
So be sure you go into any and all discussions about potential rent increases with a friendly and respectful attitude. Remember that for a yearly tenancy, you need to give at least six month’s notice. For shorter tenancies, the required period is one month – but you should always err on the side of generosity when it comes to the notice period.
While you should not be afraid to raise the rent if you think it’s necessary, you should prioritise maintaining a good landlord-tenant relationship in all your negotiations.