Landlords increase rent for various reasons, primarily to ensure the profitability of their rental properties. Between operating costs and monthly expenses, property owners have numerous responsibilities to keep the property running smoothly.
There is a proper way to raise rent, and understanding this can help you remain compliant while fostering positive landlord-tenant relationships.
Considering Your Lease Agreement
There are specific circumstances in which you can implement rent increases. One is when a month-to-month lease ends, or if there are stated provisions in the rental agreement of a fixed-term lease.
If you foresee plans to raise rent in the future, adding a rental agreement term that clarifies the possibility could help you avoid any disputes.
Providing Proper Notice
Generally, landlords in Indiana are required to follow a notice period of at least 30 days before raising the rent. The reasonable notice period for fixed-term leases, however, should be around 90 days or more.
You can include in the written notice why you're implementing a rent increase, as tenants might also question the reason behind it.
Considering Landlord-Tenant Laws
Some of the valid reasons behind rent increases include higher maintenance and utility bills, renovations, or an increase in property taxes.
Discriminatory practices like raising rent for particular tenants based on race, color, religion, sex, national origin, familial status, or disability are a violation of the Fair Housing Act.
Rent increases after a resident complains are also retaliatory, which violates tenant rights, as it constitutes an illegal rent increase.
Rent Control Laws
While there are no Indiana rent increase laws to worry about, you should still be mindful about how much you intend to increase the monthly rent amount.
Rent control laws or not, you can quickly deter tenants from renewing their leases if the rent increase becomes unreasonable. Compare the charges that landlords in Indiana impose on their rent prices. The average rent price in the state is $1,400 per month.
Optimal Market Conditions
Research your competitors and determine their rental rates before raising your own. Raising the rent too high compared to similar properties in your area may give tenants reasons to avoid renewal when their lease expires.
Indiana landlords are likely aware of the lack of statewide rent control laws and understand that abusing the potential for uncapped rent increases can lead to lease terminations and vacancy costs.
Rental Property Condition
While there are no landlord-tenant laws stating that you have to renovate or upgrade the property or rental unit before raising the rent, doing so can help you avoid landlord-tenant disputes.
Ensure your property is in good condition before sending a written notice for a rent increase. If anything, this act of goodwill might encourage long-term tenants to stay.
After You Raise Rent
- Update the rent amount in the lease agreement. The date when tenants pay rent can stay the same, but the amount should be updated to avoid any misunderstandings.
- Change the security deposit amount. It's also important to update the security deposit amount in the rental agreement, as it's often based on your rent price. While there is no law in Indiana limiting security deposits, most landlords stick to around an equivalent of one to two months’ rent.
- Communicate why you raised the rent. Indiana landlords are not obligated to, but month-to-month tenants would appreciate an explanation even if you already provided the rent increase notice required.
- Review the record of rent payments. By reviewing when and how much you collected from your tenants, you can avoid charging the increased rate before you are allowed to.
Alternatives to Raising Rent
Before you consider a rent hike, think about the ways you can reduce other costs first. There are several ways to delay it, and doing so could be in the best interest of all parties involved.
Offering Lease Renewal Incentives
If your problem lies with tenant retention, you can begin offering incentives such as rent discounts, drafting a new rental agreement, or providing complimentary access to amenities. A reduced rent payment is better than no rent at all.
Adding New Services
Additional sources of income, such as a coin-operated laundry or a cleaning service, can help you avoid increasing the rent for your tenants. They would have access to the necessary amenities, and you can earn more than you need.
Exploring Rental Assistance
If you are on the verge of evicting tenants for overdue rent after already deducting from their security deposit, you can instead find rental assistance programs for Indiana tenants. It can be a better alternative to vacancy, and you won't displace a tenant in need.
Optimizing Energy Efficiency
Energy efficiency can reduce operational costs, including utility bills. It would also attract eco-conscious tenants who watch their energy usage, so it might require you to shoulder initial costs, but it can provide long-term benefits.
Rent Increase FAQs
Are rent increases unethical for landlords?
- That depends on the circumstances behind the decision. If you're implementing a rent hike to maintain the property or to improve it for your tenants, then it's a reasonable change.
Can I lose tenants if I raise the rent?
- Yes, but you can prevent that by communicating why you need to raise the rent, as well as providing adequate notice.
Can tenants file a lawsuit against landlords for raising rent?
- Tenants can file a lawsuit if the reason behind the rent hike is illegal and unethical. That can be in the form of a retaliatory rent increase or charging more based on protected classes.
Let CRM Properties Help You Navigate This Step
Rent increases can be tricky. In addition to Indiana laws, there are other factors to consider, such as tenant retention, rental comps, proper procedures, and more. Companies like CRM Properties can provide professional expertise on these matters, enabling you to make informed decisions.
Our priority is to maximize the profitability of your rental property, and we achieve this with expert property management services.
You can learn all about the benefits of our services, and the first step is to contact us! Let us help you with your investment journey.