
Raising rent prices, while not ideal for tenants, is a vital part of owning rental properties. It helps ensure landlords have steady income despite economic factors like inflation or rising operational costs. However, you don’t want to overdo it. If you continuously raise rent prices or set your rent at an unrealistic price, you’re going to lose renters. So, today, we’ll discuss a few things to consider before raising prices, the best times to increase rent, and when you shouldn’t.
Contents of This Article:
- Why Raise Rent Prices?
- What to Consider Before Raising Rent
- When’s the Best Time to Raise Rent Prices?
- When Can’t a Landlord Raise Rent?
- Let PPM Handle Rent Increases
Why Raise Rent Prices?
As a landlord, you have to raise rent at some point. However, as Northern Virginia property management companies know, you don’t want to raise your prices for no reason. After all, you want to stay competitive with similar rentals and consider your tenant’s expectations for your property. That said, here are a few of the most common reasons landlords raise rent prices.
- Rising Costs- Factors like inflation, property taxes, and rising utility costs can force landlords to raise prices to cover their bills.
- Market Adjustments- If similar properties in the area raise their rent prices, landlords may feel pressure to keep their prices competitive.
- Upgrades and Improvements- Investing in property upgrades like energy-efficient appliances or security systems adds value, a common reason for rent increases.
- Lease Renewals- Gradual rent increases during lease renewals are a normal part of the rental process.
What to Consider Before Raising Rent
If you’re a landlord, there are several things you’ll want to consider before you raise prices on your rentals. After all, you want to ensure you’re keeping things fair, competitive, and profitable. Here are some considerations to keep in mind.
- Similar Properties- Before raising rates, compare prices for similar rental properties on websites like Zillow or Realtor.com. This can give you a good idea of where your prices should land.
- Legal Requirements- Some state or local laws may limit the amount or frequency of rent increases. It’s important to know the laws for your property to avoid legal trouble.
- Notice Periods- Most landlord-tenant laws require landlords to provide notice when increasing the rent, usually around 30 to 90 days in advance.
- Tenant Relationships- Good relationships with long-term tenants are valuable. So you’ll also want to consider whether an increase will cause a tenant to leave or if they’ll say regardless.
When’s the Best Time to Raise Rent Prices?
Timing is key when it comes to raising rent. Generally, landlords can’t just raise prices whenever they feel like it. Instead, landlords should try to align with tenant expectations and market conditions. Here are some of the most common times to raise rent prices.
- Lease Renewal Periods
- Strong Demand and Competition
- After Property Improvements
Lease Renewal Periods
The end of a lease term is the most common and generally most appropriate time to increase rent prices. It gives tenants the choice to accept the new rate, negotiate pricing, or move out and find a new rental. That said, if you’re planning on increasing rent at renewal time, you still have to give tenants ample notice, usually 30 to 90 days, depending on state or local laws.
Strong Demand and Competition
If the rental market is experiencing high demand or low vacancy rates, this may be a good time to raise rent. After all, tenants are more likely to accept higher prices if they see that other properties are charging similar rates. That said, it’s important to monitor market trends to avoid pricing yourself too high or too low compared to the competition.
After Property Improvements
When you’ve made significant upgrades or renovations to your rental property, like updating the kitchen, installing new flooring, or improving landscaping, you can factor these costs into the rent price. Tenants usually view these upgrades as added value and may be more accepting of a rent increase.
When Can’t a Landlord Raise Rent?
As a landlord, you may think you can raise rent anytime. After all, it’s your property, isn’t it? Well, that’s not always the case. There may be certain situations where increasing rent may be illegal or inappropriate. Some of these scenarios include:
- During an active lease
- The lease doesn’t allow for an increase in rent
- Proper notice wasn’t given to the tenant
- The property is in a rent-controlled area
- Rent is raised in retaliation against a tenant
- The raise is discriminatory
- The increase is too high per state or local laws
Let PPM Handle Rent Increases
If you’re a landlord wondering when to raise rent prices, there are a few things to know and consider. It’s important to know laws regarding rent increases, think about market conditions, and maintain tenant expectations.
When you work with Professional Property Management in Northern Virginia, our team helps you handle rent increases. We know property management best practices and can help your rental business succeed. Contact PPM today to learn more about our comprehensive management services.