Rent Increases Explained for Tenants and Landlords

Few letters cause more groans than a notice that rent is going up. But rent increases are a normal part of the rental market, and understanding how they work can help whether you are the one paying rent or the one collecting it.

If You Are a Renter

When you sign a lease, the rent is set for the length of that agreement. During a fixed-term lease, the landlord generally cannot raise it unless the lease itself allows for changes. The opportunity for an increase usually comes when it is time to renew.

Increases often reflect rising costs in the area, including property taxes, insurance and maintenance. When home values and living costs climb, rents tend to follow. A few things to keep in mind:

• Read your lease: it should explain notice requirements and renewal terms.
• Know local rules: some places have rent control or limits on how much and how often rent can rise; many areas do not.
• Ask questions: landlords may be open to a longer lease in exchange for a smaller increase.

A rising rent can also be a good moment to compare renting with buying. With a fixed-rate mortgage, your principal and interest stay the same for the life of the loan, even though taxes and insurance can change.

If your rent keeps climbing, take a look at your monthly housing cost alongside what a mortgage payment might be in your area. Some renters are surprised to find that buying may be within reach, especially with low down payment programs. Others decide renting still makes sense for now, and that is perfectly fine. Either way, it helps to see the numbers.

If You Are a Landlord

As an owner, you set the rent and can adjust it between leases, within whatever local rules apply. The challenge is finding the right number.

1. Study the market. Look at what comparable rentals nearby are charging. Price too high and the unit may sit empty, which means no income at all.
2. Factor in improvements. If you added features like a fenced yard, new appliances or a pool, a higher rent may be justified.
3. Weigh turnover costs. Cleaning, repairs and vacancy between tenants add up. Keeping a reliable tenant with a modest increase can be worth more than a bigger increase that prompts them to leave.

A knowledgeable property manager can help you set a competitive rate and handle notices properly.

Thinking About Growing Your Portfolio?

If you own rentals or want to, financing built for investors can help. Learn about our investment property loans and DSCR loans, which may let qualifying investors use a property’s rental income to help qualify.

Whether you are ready to stop renting or ready to buy your next rental, talk with a FLO Mortgage loan officer about your options.

This article is for general education and is not a commitment to lend. All loans are subject to credit approval, underwriting guidelines and program availability. FLO Mortgage, Company NMLS #1835856. Equal Housing Opportunity.