Raising the rent is controversial. Should landlords raise prices?
Affordable housing continues to be a dire issue in Maryland, with a high percentage of young adults living at home because of a lack of options and stagnant wages. Even more established families can struggle when wages are the same, but inflation increases the cost of everything else. Even so, everyone has to survive and thrive in difficult economic times. Should landlords raise rental rates?
Should Landlords Raise Rental Rates?
Pros
If landlords raise rental rates, they can continue to afford the property taxes, insurance, and regular building maintenance for the property, which ultimately benefits the tenants’ quality of life. Sometimes, the landlord has to raise prices to stay afloat.
A landlord might also increase the rent to maintain their income level. If the landlord’s income level drops because of inflated taxes and other costs, he might want to raise the rent to maintain that income. Landlords need to live, too!
Raising the rental rate could also help price the property competitively, showing its true value in the present economic times.
Cons
Raising the rent every year or every lease agreement could lead to increased tenant turnover, or, at worst, vacancies that are difficult to fill. When the job market is tough, it isn’t so easy to just get a higher paying job.
Continually raising the rent could lead to friction between the landlord and the tenants as well. However, there are ways to do it right when it makes sense.
How to Raise Rental Rates
In Small Increments
It’s best to keep the rent increase small rather than shocking tenants with a spiking price. The general rule is to increase the rent by 3-5% each time.
With Advance Notice
Landlords can avoid tensions with tenants by giving them a rent increase notice three months in advance. Letting tenants know well in advance allows them to prepare accordingly. Thankfully, a very small increase will usually be perfectly fine.
Possible Deals
Some landlords help tenants out by offering them upgrades in exchange for the increased monthly or yearly rent. For example, a landlord might include a washer/dryer upgrade with the price hike.
Raise, Lower, or Keep the Same?
Landlords shouldn’t automatically raise rent. In fact, some years may have no increase, and some may even see a decrease to stay competitive and fair. The decision requires a year-by-year look at all the factors.
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