What's A Reasonable Rent Increase in 2025?

Most states in the U.S. don't have a rent control law that allows landlords to raise rent as long as it's reasonable and proper notice has been given to the tenant. The states that do have rent control ordinances usually cap rent increases to a certain percentage annually. 

But, what is a reasonable rent increase? A reasonable rent increase is one that reflects actual market conditions and is in compliance with state laws. 

This article will cover everything you need to know about raising rents, including when it's possible, how much you can raise rent, and the notice requirements. 

Useful Resource: Landlord-Tenant Laws by State

Summary: What’s a Reasonable Rent Increase in 2025

For real estate investors, finding the right balance between raising rents and keeping tenants happy can be tough, especially with rising costs and shifting market conditions. To set a fair rent increase, start by reviewing your expenses, checking current market trends, and comparing your property to others nearby. Key factors like location, size, amenities, and local economic conditions all influence what’s considered a competitive rate.

Be mindful when implementing rent hikes to avoid issues like inadequate notice or violations of rent control laws. Clear communication, offering a valid explanation, and giving tenants the required notice (usually 30-60 days) can smooth the process. 

Landlords should aim to keep rents in line with the local market conditions. Typically, this means a rent increase of 3-5% each year is deemed ‘reasonable’, however, recent years have seen increased fluctuations in rent prices and larger rent increase might be justifiable if the market changes significantly. Whatever you decide, aim to strike a balance between boosting profitability and keeping tenants satisfied.

How To Determine What’s A Reasonable Rent Increase in 2025?

There are different factors that come into play which affect how much a landlord can increase their rent including local regulations, market trends, property conditions, and lease agreements.

Below is an overview of these factors that affect rent increases. 

1. Lease Length

The duration of the lease plays a pivotal role in determining when and how much rent can be increased. Typically, landlords cannot raise the rent during the term of an existing lease unless specific provisions allow for such adjustments. 

Most leases are structured as year-long agreements that establish fixed terms, including the rental amount. However, once the lease expires, landlords are entitled to notify tenants about any planned rent increases. It is standard practice to provide at least 30-60 days' notice before implementing any changes to the rent.

Read more: How to Write a Friendly Landlord Rent Increase Letter

2. Property Condition

The condition of the rental property is another critical factor influencing rent increases. If a property is in disrepair or lacks modern amenities, raising the rent may be unjustifiable and could lead to higher vacancy rates. 

Landlords should carefully assess the state of their properties and consider whether any improvements or renovations have been made before deciding to increase rents. A well-maintained property can command higher rents, while a neglected one may necessitate lower rates to attract tenants.

3. Market Factors

Market conditions significantly affect rental pricing strategies. If rental prices in the area are on the rise, it may be appropriate for landlords to adjust their rates accordingly. Conversely, if market rents are declining or if there is difficulty in attracting tenants, it might be wise to keep rents stable or even lower them to remain competitive. 

Conducting thorough market research by analyzing comparable properties and consulting local real estate agents can provide valuable insights into appropriate pricing strategies.

4. Rent Control Regulations

In certain jurisdictions, rent control laws impose restrictions on how much landlords can increase rent each year. States like California, New York, and Oregon have established ordinances that limit annual rent hikes, often tying them to inflation or setting specific percentage caps. 

Landlords operating in these areas must familiarize themselves with local regulations to ensure compliance when planning rent increases. Failure to adhere to these laws can result in legal disputes or penalties.

Read more: How Much Can a Landlord Raise the Rent?

When Can a Landlord Raise the Rent?

Typically, landlords are allowed to raise the rent only at the end of the lease term—rent increases during a lease are not allowed unless the lease agreement explicitly says so. At that point, landlords may need to offer a new lease with modified terms, including a higher rent. 

That's why it's essential for both landlord and tenant to carefully review the lease agreement to understand their rights and obligations regarding potential rent hikes.

Factors Influencing Rent Increases

Several factors might prompt a landlord to consider raising the rent:

• Local Market Conditions: If rental prices in your area are increasing, landlords may choose to raise their rents to remain competitive.
• Property Improvements: Significant renovations or upgrades to the property can justify higher rents. For instance, if new amenities such as a gym or improved security systems are added, landlords may pass some of these costs onto tenants.
• Expiration of Rent Control Ordinances: In regions with rent control laws, landlords may be limited in how much they can increase rents annually. However, once such regulations expire, they might have more freedom to set new rental rates.

Legal Protections for Tenants

Tenants have legal protections against arbitrary rent increases. For example, in many jurisdictions, landlords cannot unilaterally increase rent without tenant consent. If a tenant believes that a proposed increase is unreasonable or unjustified, they have the right to challenge it legally. 

Courts often consider factors such as comparable rents in the area and the overall condition of the property when evaluating disputes over rent increases.

Notice Requirements for Rent Increases

When it comes to increasing rent, both local and state landlord-tenant laws dictate the notice period that must be provided to tenants. Here are some key rules to keep in mind when notifying tenants about a rent increase:

Month-to-Month Lease

For tenants on a month-to-month lease, landlords are required to provide a 30-day notice before implementing a rent increase. Typically, this notice must reach the tenant at least 30 days before the start of the month in which the new rent will take effect.

Download a month-to-month lease template here

Long-Term Lease Agreement

For tenants under long-term leases, such as those lasting one or two years, most states mandate that landlords issue either a 30-day or 60-day notice prior to raising the rent. Additionally, some landlords who offer long-term leases may include a provision for annual rent increases of a specified amount.

Download a long-term lease template here

Rent Increases as Retaliation or Discrimination

Landlords are prohibited from raising rent in a discriminatory manner in accordance with the provisions included in the federal Fair Housing Act and some local laws. This means they cannot increase rent based on a tenant's race, religion, or family status, such as having children. 

While proving discrimination can be challenging, if you have compelling evidence—like testimonies from other tenants who faced similar treatment—tenants may have a strong case to contest a rent increase.

Furthermore, in many states, landlords cannot impose a rent hike, evict you, or reduce services as retaliation for exercising your legal rights. 

For instance, if a tenant files a legitimate complaint with a public agency regarding unsafe conditions in a rental unit, the landlord is not allowed to raise your rent as a form of punishment. Some states even assume that a landlord has bad intentions if the rent increase occurs shortly after a tenant asserts their legal rights.

What is a Reasonable Rent Increase 2025?

Finding the right balance when it comes to increasing rent is crucial. You want to avoid pricing your tenants out of their homes while also ensuring that your rental income aligns with current market rates. 

Here are some effective strategies to help you determine a reasonable rent increase.

Analyze Comparable Properties

Start by reviewing similar units in your area. Look for properties that match yours in size, features, and amenities. By examining their rental prices, you can establish a solid benchmark for what you might charge for your own unit.

Conduct Market Research

Another valuable approach is to survey the local rental market. Engage with other landlords and property managers to understand the rates they are charging for comparable units. This insight will help you gauge market trends and identify a rent increase that your tenants can realistically manage.

What’s A Reasonable Rent Increase? Final Words 

Ultimately, a reasonable rent increase for landlords would depend on several factors, including market conditions, property conditions, and lease agreements, but rent increases have averaged around 3-5% historically. It's important to note that while most states allow landlords to adjust rents as long as they provide proper notice, it's essential to ensure that any increase aligns with local regulations and reflects the true value of the rental property. 

We recommend that landlords analyze comparable properties and stay informed about market trends to be able to implement fair increases that maintain tenant relationships while also safeguarding their investment. 

Additionally, utilizing tools like Landlord Studio can simplify the rent collection process and help landlords manage rent change, and stay on top of payments. With automatic reminders, online payment options, and detailed financial reports, Landlord Studio ensures that rent collection is streamlined, making it easier for landlords to focus on growing their investments while maintaining positive tenant relationships.

Create a free Landlord Studio account today.

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