Raising rent is one of the most tricky topics landlords have to face while running their rental property, especially in a scenario where the cost of living is soaring in Canada. Whether you’re navigating rising maintenance costs, adjusting to inflation, or trying to match market prices, deciding when and how to increase rent requires careful consideration. In this blog, we’ll explore the key factors landlords should consider when determining the best timing for a rent increase. From understanding market trends and tenant retention to staying compliant with the regulations, this guide will help you make an informed, fair, and strategic decision that benefits both you and your tenants.
Our Recommendations to Raise Rent and Keep Your Tenants
1 – Check the Regulations and the Market
In Alberta, landlords can raise rent one year after the start of the tenancy or a year after the last increase in case of monthly leases. Even though there’s no cap on how much landlords can increase rent, you should do market research to have an idea of the average rental rates in the neighbourhood for similar properties.
Tools like online listings can help you ensure your increase is fair and aligns with the market conditions. It will help you know if your tenant can find another property easily or not, as a high vacancy rate in your area could make it more attractive to move out for them. As a rule of thumb, make an increase within 3% to 5% to keep it reasonable. Once you get your new rental price, send a letter, signed by you or your property manager, to your tenant informing them about the new price three months before you start charging it.
2 – Make Sure You Respect the Longevity-Stability-Ability Formula
Our signature formula to screen tenants can also be used to assess the perfect timing to raise rent. If the raise would be a significant burden for a long-term tenant, or it could motivate the tenant to leave the property, we recommend talking to them to reach an agreement that fits their budget. Remember, a vacant property only generates expenses, so following the Longevity-Stability-Ability formula is the best way to retain good-quality tenants and ensure you get a consistent and stable income.
3 – Be Transparent
Being upfront about your reasons for the increase is the best way to negotiate with your tenants. If rising taxes, maintenance costs, or hiking inflation are factors, explain them to your tenants. Transparency and open communication foster understanding and reduce the likelihood of conflict, as your tenant may be more understanding of your situation.
4 – Offer Value In Return
If your budget allows you to, consider making upgrades or offering added benefits, such as new appliances or better amenities. If your tenants see the value added to their living experience, they’ll be more likely to accept the increase.
5 – Reward Long-Term Tenants
Following the longevity aspect of our formula, we recommend recognizing the value long-term tenants contribute to your rental business. Consider offering reduced increases or perks to tenants who have consistently paid rent on time and maintained the property well to ensure they’re happy and more willing to stay in the property after the increase.
Raise Your Rent With Ease
Figuring out when and how to raise rent can be challenging in property management, and getting it right requires a careful approach. However, raising your rent while keeping your tenants happy is possible if they see the value of renting your property. With transparency, fairness, and goodwill, you can create a positive landlord-tenant relationship that benefits everyone involved.
