How High Can Landlords Legally Raise Rental Rates?

2022-09-12 13:03:49 - Baltimore, Maryland, United States - (PR Distribution™)

One of the main benefits of investing in real estate is its ability to hedge inflation. In other words, even amid economic downturns, investors can still make a profit from their rental portfolios. Although, it is because property values increase in price as time passes. Thus, whether you've invested in Colorado's current real estate market or the promising Southern Belt, rental increases should be a norm. 

However, while landlords and tenants expect rental increases, jumping the gun can put you in a tricky situation. Today we'll talk about how high landlords can legally raise rental rates. 

How High Can Landlords Legally Raise Rental Rates

While there’s no explicit law that dictates how and when landlords should raise their rates, there are legal restrictions you have to follow. 

First, you should consider the lease you signed with your tenants. Some rental agreements dictate how often and how much landlords can increase their rent. While most clauses give the property owner veto power, not all do. Thus, it would be best to become familiar with yours. 

Although, irrespective of your lease, the landlord-tenant laws in your jurisdiction trump all clauses. In other words, your state's rent control laws are more important than any signed agreement. Certain places make raising your rent by more than 20% illegal. Sometimes these laws can even vary within the same state. Thus, it would be wise to hire a rental home management company that can guide you in the process of increasing rental rates. 

Tips to Raise Rent and Not Lose Tenants

Keep Your Prices Fair

One of the simplest ways to ensure you don't lose tenants during a rental increase is to keep your prices fair. If your fees are too high, renters will feel overcharged and look for housing elsewhere. On the other hand, if your charges are too low, you might not be able to cover your bills and lose money. 

Thus, it would be best to consider researching fair market values around your area. It's crucial that you also consider your expenses when setting the rent. For example, monthly costs you would need to keep up with include mortgage repayments, utility, and property taxes. You should ensure that deducting these expenses from your gross returns would leave you with a substantial net income. 

Make Upgrades

Another way to raise your rent without losing tenants is to make upgrades. If you make renters feel like your property is worth their while, they’ll find it easier to stick around longer. 

Therefore, it would be a good idea to research upgrades with high ROI that can improve the value you deliver. Also, if you're unsure what to install, you can ask your renters what they need. Property owners get some of the most common upgrade requests, include an in-building washer-dryer, more parking, and greater curb appeal. Remember that according to the landlords' guide to rent increases, you need to consider the cost of your expenses. Thus, if your new upgrade requires some maintenance to stay viable, you can add it to your rental increase. 

Notify Tenants before the Deadline

If you want to avoid losing tenants from a rental hike, it would be best to tell them beforehand. Some landlords make the mistake of springing an increment on their renters at the last possible moment to trap them. However, such actions are often unfair and rarely work. As a result, it would be best to give tenants as much notice as possible. 

When renters have sufficient time to weigh the pros and cons of committing to another year, they can notify you faster. That way, you'll know earlier whether your renters plan to stay or leave. More so, it also gives you sufficient time to look for a replacement if need be. 

Do a Slight Yearly Increment

Most landlords prefer to keep their prices steady to keep renters and vacancies low. However, this strategy can backfire if you maintain the same rates for too long. Instead of bumping your rental rates considerably after a couple of stale years, it would be best to increase them yearly. 

For example, instead of suddenly raising your rent by $100, you can increase it by $20 every year for five years. While this habit can help you stay ahead of economic downturns, it can also reinforce tenant expectations. Setting a precedent that rent goes up yearly will make it easier for renters to adjust and be more accommodating of an increment. 

Offer an Incentive for a Long-term Renewal

If one of your priorities is getting tenants to stick around longer, you could offer them an incentive. Some landlords allow renters to commit to two or three-year rental agreements. These leases often guarantee longer tenancies with higher rates of occupancy. 

As an incentive, you can agree to allow tenants to pay a specific amount throughout their tenancy. While that might mean losing out on future increments, you could still reap more profits with that arrangement. After all, longer leases also mean steady rental payments. 


Knowing the right way to raise your rent as a property owner can save you from a lot of civil drama. While it is your property, many states have laws on what percentage increment you can add yearly. Thus, how high landlords can legally raise rental rates depends on several factors, including their location, jurisdiction, and even financial goals. 

If you need help navigating the complexities of rent increases and collections, you should rely on an expert. Property managers are professionals that can help you manage your units, handle tenants, and maximize profits. 

Media Contacts:

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Patrick Freeze
Bay Property Management Group
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