There is a law here allowing the landlord to increase the rent every year not to exceed 20% based on the present rent. But although that rate of increase is legal, tenants couldn't abide if that would be implemented. From what I know, landlords increase the rent by 10% on the average every 2 years. At least the increase is humane and not much of a burden to the tenant.
Any rent increase is going to be frowned upon by a tenant and won't go down to well, so while I think it is necessary to increase the rent on an annual basis, I do think you have to take into consideration the effect it will have on the tenant aswell.
Rent increases are something normal, but we need to play both with legislation and with common sense because if we try to increase the rent too much the tenants will simply leave.
It's simple. If you raise it, then raise it yearly according to inflation. And that is it. Anything more is just punishing your tenant. Less is always acceptable if you are happy with the tenant and want to make sure that he stays.
There are some landlord who follow the law - they increase the rent every year. And you are right, most of their tenants leave because of the exorbitant increases of rent. But some of their tenants remain and pay the usual rent sans the increase. Even if the landlord would get angry, the tenant would just say that they don't have the money for the increased rent and if the landlord would insist then they just wouldn't pay rent anymore and bring the issue to the court.
Like on my contract between myself and my real estate agent, there is a clause that says rent will be increased annually at a rate of 2.5%...I think that is fair for all parties involved...if it was a higher percentage, I bet the tenant would 'up' and leave...but I want to establish a good relationship, make the tenant feel at ease.
Landlords should play it safe. Raise the rent when all other landlords raise their rent. If not, your tenants will simply move to cheaper apartments as long as they are just as good. I think this is why landlords should network. The business would even be more profitable.
I bet even market share value comes into play...and a lot of other factors when thinking about raising rent value, but am thinking, having a sit-down with the real estate agent and the tenant and discussing/ironing things out does a lot of good...in avoiding dramatics in the end.
I agree with that sit down discussion of the rent increase. At least the tenant is given an opportunity to express his opinion on the matter even if that is only a formality. But then again, being realistic is what counts. Raising the rent unreasonably is like killing the goose that is laying the golden egg. How can a tenant pay rent when the rent has become exorbitant to his budget? That would probably be the argument of the tenant in the discussion, that he cannot afford the increased rent anymore. So a consideration is to be considered by the landlord.
I think the one time a landlord doesn't need to ask real estate about raising the rent is when they renovate the property. For example if you increase building security, the tenants will have to pay a little extra to keep out burglars and other nasty creeps.