I want to raise the rent on a tenant that I've had for two years. I'm increasing the rent $50 per month beginning January 1st. What is the best way to do this? My lease doesn't talk about rent increases at all. The tenant signed a one year lease that expired in January 2015 and they are currently month to month. I was planning on calling the tenant to let them know about the rent increase and then mailing them a letter just to give them something in writing. Should I be sending them something to sign, like an amendment to the lease? I'm in Baltimore County, Maryland if that makes a difference.
@Justin Donohue so I would just have them sign a new lease that states the new rent amount (I'm not an attorney though and you should check with one just in case). However, I recommend improving something in the property before increasing the rent. It could be something silly like paint or a new microwave but I just always make it a point to show the tenant that I take care of the property and keep making improvements and that is why I am increasing the rent. There are a lot of slum lords out there that don't take care of the property at all and keep trying to increase rent and eventually force the tenants to leave. Thats just me, I like to make my tenants feel like they are paying a little more for a great product.
The tenant needs at least 30 days notice, (it may be 60 days, it is in Baltimore city). You need to notify the tenant and they would have to sign a new lease of addendum for the current lease. Most likely the current lease has a month to month extension provision so it hasn't truly "expired"
Until the tenant signs for the price increase it is not valid. Your option then is to fail to renew the lease and then file for tenant holding over.
The approach I would take would be something like. "We are happy to have you as a tenant and we hope you want to stay. We are not renewing your current lease as of X date and the new lease will be at a rent of X amount."
I am not an attorney and the above is not legal advice. It is simply how I might handle a similar situation.
@Ned Carey is right about the 30 days notice. Adding a little value to them is always a great idea! If the tenant is great, I would work to avoide turnover. $50 is no small amount, depending on what rent is. If you do a new lease with them, I would definitely add language about future rent increases. Many address it by saying that it can be increased by a certain percentage annually.
Does anyone have an example of a lease addendum that I could use?
if you have a good tenant is 50$ worth trading them for one who pays late or doesn't pay at all? Maybe they cause complaints from the neighbors. I say maybe 25$ is a little more reasonable, don't price yourself out of a good tenant. Just a different opinion then the other posts.
I love the strategy of giving something extra. Another one I heard of is to say, "I really need to raise the rent by $100, and wanted to see if this was something you think you could reasonably afford. What do you think?" They will often counter and you'll meet in the middle. And if they come to $40 a month, are you really going to be upset over $120 a year versus the cost of turnover?