Most tenants expect that their rent will increase when renting. Annual increases help property owners cover rising expenses, such as property taxes and utilities, not to mention maintenance costs.

However, when considering a rent increase, it’s imperative to do it properly. Not only do states and jurisdictions have laws around rent increases, but you don’t want to discourage tenants from renewing the lease when you do so.

So how much should you increase the rent, and when is it appropriate to do so? Here’s what you need to know as a landlord in DC.

When to Increase the Rent Amount

It’s important to note that you cannot increase the rent anytime you want. You can only increase the rent when your tenant’s lease is up during the lease renewal.

So, for example, if your tenant has an annual lease, you can raise the rent annually. If your renters have a month-to-month lease, you can increase the rent during the renewal, but you should still provide your tenants with notice beforehand.

Keep in mind that there are some limitations around increasing the rent. For example, if the tenant’s current lease says that the rent will not increase during a renewal, then you can’t legally increase it. You also may not be able to raise the rent for those with Housing Choice Vouchers, also called Section 8 housing.

So How Much Should You Increase the Rent?

First, determine how much your income property costs you every year. A good way to do this is to look at your costs for an entire year instead of taking a month’s worth of expenses and multiplying by 12. Include expenses such as maintenance, property taxes, and HOA fees.

Next, check rental rates in your area. Look at rental properties similar to yours in size, condition, and amenities and see what they are going for. While checking comparable properties, you can also evaluate rental trends in your area.

For example, although rates may be increasing, tenants may be moving away because of high rates, resulting in lower demand. Being mindful of these trends can help you make the best decision when increasing the rent for your investment.

Remember that setting rates too high could mean losing your current tenants or result in problems attracting new tenants.

Notifying Your Tenants of Rent Increases

Remember, you can only increase the rate during lease renewal. However, it’s best to notify tenants of the rent increase beforehand. Aim to give your current residents a minimum of 30 days’ notice of the new rent amount before the lease renewal.

You can also include a clause in your tenant’s lease before they sign indicating that the rent will increase each year, so there is no surprise when the time comes to renew. However, even if the lease does include this clause, you must still notify your tenants of the increase before the renewal.

The best way to notify your tenants is via certified mail so that you have a receipt that the document was delivered to the resident.

Considering a Rental Increase for Your Investment?

Deciding to increase rent is an important decision and needs to be done properly and in accordance with local laws. If you’re considering a rental increase for your investment property, do so with the help of FAS Management. We can compare properties and help you decide on the best amount to raise the rent so you can retain tenants but cover your annual expenses. Contact us at (202) 337-5080 today to get started.