Stay in the same place for more than a year or two and you're bound to encounter the dreaded rent increase letter. Most of the time, it's not usually too big of a price hike, as the average national rent for a one-bedroom apartment increased by about 2 percent in 2020.
Your first instinct may lead you to pack up and move out, but that sort of knee-jerk reaction is ill-advised. After all, there's no assurance that your next place won't get hit with a rent increase down the road. So if you love where you live and want to stay, don't get out the packing tape and cardboard boxes yet. See if there's a way to make it work for you, instead!
Knowledge is power, so it pays to understand the factors that influence rent increases. Rental rates vary from building to building, and the same is true of rent hikes. Your property manager doesn't have to give you a reason why they're raising the rent, but knowing the rationale for the increase might help you come to terms with the extra hit to your budget. Rent increase motives vary. Often, the increase stems from one or more of the following:
Some apartment buildings will offer the rate increase reasons upfront and in writing, but they're not required to. Still, you're well within your rights to inquire with management. “You'll want to know the specifics of why some apartment rents rise every year, so you can make sure the new rate makes sense," said Holly Welles with The Estate Update. It's also helpful to do a little research into average rent prices within your building, as well as those close by with comparable units. This can help confirm the rent increase is appropriate. It may also give you a reason to fight it.
Individual states govern rent increase protocol, although the rules are pretty uniform.
If you have a written lease the good news is you should not get completely blindsided by a rent increase. Instead, the property owner has to explain their rent increase policy up-front within the lease you sign. The lease must also explain how often a rent increase can happen. Almost always, the landlord has to wait until the end of the lease to increase rent, but if you sign something that states otherwise you could be stuck with it.
Usually, the landlord supplies a rent increase notice 30 to 60 days in advance, but requirements vary by state and if the lease in question is month-to-month, the rules are a little different. Landlords can raise the rent at any time, as long as they provide 30 days' notice.
For any increase, the notice must be in writing. Do not accept a verbal request. If a rent increase notice comes to you out of the blue, you may have the law on your side to fight it and should consider consulting a lawyer. It is also against the law for a landlord to raise rent just because they think you're a difficult tenant. The rent also cannot be raised in a discriminatory fashion.
Rent increase letters are pretty standard, and include the following necessary information:
Landlords send rent increase letters certified mail or delivered by hand. This way, the landlord knows the tenant definitely received it. Email delivery's not allowed, although the landlord can follow-up that way to make sure you received it. Some landlords opt to go one step further and include a reply form at the bottom. The tenant checks a box next to a statement of whether they do or don't agree to the rent increase and asks for a signature.
If you're totally fine with a rent increase, go ahead and follow whatever instructions are on the letter. Some landlords will require a response, but some won't. If there's any doubt in your mind about the rent increase, take a reasonable amount of time to ponder the pros and cons of accepting versus rejecting. Tenants who still aren't sure about the rationale, or who wish to negotiate can then challenge the increase, but make sure it's done in a professional and friendly manner.
Realizing that there's no consistency when it comes to rent increases leaves the topic open for some negotiation. After some back-and-forth with your property manager, you may decide to stay is the best option. You also may leave the conversation ready to find somewhere new. Whatever you do, keep all conversations in writing. If you do discuss anything verbally with the landlord, be sure to follow up with an email or letter summarizing the conversation. This will protect you if a legal battle ensues. Here are some options on how to handle a rent increase letter:
If you're unhappy with the rent increase, or simply have questions, set up a meeting to discuss with the manager. This also allows you to negotiate the terms of the increase. A diplomatic approach to the conversation is best, since they don't owe you an explanation for their choice, nor do they have to consider your argument for changing the increase. If you have something to offer them and can negotiate terms, there's a possibility you'll get something out of this, too. Consider offering to:
It also can't hurt to remind your property owner of how great of a tenant you are. “A tenant who pays on time, maintains the apartment and complains infrequently should remind their landlord of that. Landlords would rather keep well-behaved tenants than pay turnover costs to find an unknown tenant," said Caitlin McCabe from RIS Media. Sometimes, tenants band together to make a stronger case or negotiate improvements around the property. This is a good option particularly if you feel that the rent increase is unfair.
Rent increases don't always come as a flat notification that you'll be paying more for exactly what you have right now. Property managers may try to sweeten the deal a little bit with some renewal incentives. These can range from in-apartment maintenance like a free deep clean of your carpet or actual upgrades like replacing outdated fixtures or adding better security. If incentives weren't included when you received notification about the rent increase, talk to your property manager and see what plans they have. It might be worth sticking around.
Another big argument for accepting the increase is actually the price. While it may feel like you'll have to pay a lot more each month to stay, add up the increase over the year. Is it less than what you'd have to pay to move? Moving is expensive, tiring, time-consuming and often inconvenient. You may struggle to find another apartment you like as much as where you're currently living.
All these inconveniences are not worth it when you may potentially pay more upfront than what you'll pay in increased rent over the course of a year.
For some, a rent increase notice is the last straw. Other factors in your current home could have already been pushing you in the direction of not renewing your lease, but with a rent increase, you're now certain it's time to leave. You may also already be dealing with:
Once again, there's also a cost to consider as a reason for moving out. Think hard if your rent increase is higher than other tenants, or the new rent price is more than what similar units are costing in the area. If that's the case, it's definitely time to find a new place to live where you'll receive better, fair treatment
Rent increase percentages can average on the high side one year and end up significantly lower the following year, which makes it hard to prepare to face an increase. The best thing to do is not feel surprised if you receive a notice of rent increase, but instead use these tips to have a productive conversation with your property manager, should you want to stay in your apartment.