Lease Renewal Letter Template: Raising Rent Without Causing a Turnover

Introduction

The renewal letter is a small document with an outsized effect on returns, because the alternative to a renewal is a turnover — and a turnover usually costs more than the increase earns.

TL;DR: Send the renewal 90 days out, offer a choice of terms rather than a single take-it-or-leave-it number, and check your arithmetic first: a $75 increase earns $900 a year, while a turnover on a $1,600 unit typically costs $2,500–$4,000 in vacancy, make-ready and leasing. Push too hard and you pay for the privilege.

The arithmetic that should set the number

Before deciding on an increase, price what a vacancy costs you:

Line	Typical
Vacancy, 3–6 weeks at $1,600/mo	$1,100–$2,200
Make-ready: paint, clean, minor repairs	$800–$1,500
Leasing fee or your time	$0–$1,600
Total turnover cost	$1,900–$5,300

Against that, a $75 monthly increase earns $900 over the year. So an increase that triggers a move costs you roughly two to five years of the gain it produced.

This does not mean never raise rent. It means the increase should be set where a reasonable tenant stays — which is usually at or slightly below the top of market for a good tenant, not above it. A long-term tenant paying $50 under market is more profitable than a new one paying market and leaving in a year.

Model the effect on the whole property in the rental property ROI calculator, which deducts vacancy rather than assuming it away.

Timing

• 90 days before expiry — send the renewal offer
• 60 days — follow up if no response
• 30 days — if still nothing, begin marketing the unit

Check your lease and your state's notice requirements. Many states require 30 or 60 days' written notice of a rent increase, and some cities require more. The lease may also contain an automatic month-to-month rollover, which changes your leverage considerably.

The template

Adapt the bracketed fields. Keep it to one page.

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[Date]

[Tenant name] [Property address]

Dear [Tenant name],

Your lease for [address] expires on [expiry date]. We would like to offer you a renewal, and we would be glad to have you stay.

Renewal options

Term	Monthly rent	Effective
12 months	$[X]	[date]
18 months	$[X − 25]	[date]
Month to month	$[X + 100]	[date]

The current rent is $[current]. Comparable units in the area are currently listing between $[low] and $[high].

[Optional, where true:] Since your last renewal we have [completed improvement — new appliances, exterior paint, updated HVAC]. [Optional, where true:] We have kept the increase below market in recognition of your consistent payment history and care of the property.

All other terms of the existing lease remain unchanged.

To accept, please sign and return the enclosed renewal addendum by [date, ~21 days out]. If you have questions or would like to discuss the options, call me directly on [phone].

If you do not intend to renew, please confirm in writing by [date] so we can plan accordingly. Your lease requires [X] days' notice.

Thank you — we have appreciated having you as a resident.

[Name] [Title, company] [Phone] · [Email]

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Why the three options work

A single number invites a yes or no. Three options change the question from "will you accept?" to "which do you prefer?", and every option is acceptable to you.

The structure also does useful work on its own:

• The 18-month option at a discount buys stability — one fewer turnover risk and a longer runway before the next negotiation.
• The month-to-month premium is priced properly for once. Flexibility has real cost to you, and most landlords give it away free.
• Naming the comparable range turns the increase from an arbitrary decision into a market fact, which is the difference between a tenant feeling squeezed and feeling informed.

What not to do

• Do not send it 30 days out. A tenant who has already started looking is expensive to recover.
• Do not raise rent on a unit with unresolved maintenance requests. Fix the thing first; the increase will be accepted and the tenant will stay.
• Do not raise to exactly market on a good long-term tenant. The last $50 is what buys their loyalty, and it costs less than a turnover.
• Do not apply increases inconsistently across similar units. Fair housing exposure aside, tenants talk.
• Do not skip the increase entirely for years. A tenant at $300 under market cannot be corrected in one step without losing them, and you have already lost the income.

When a turnover is the right answer

Sometimes it is:

• The tenant is chronically late, and the arithmetic above assumes a good tenant
• The unit is far below market and needs renovation to reach it
• You are preparing to sell, and vacant-and-updated shows better
• Lease terms need restructuring that a renewal addendum cannot carry

In those cases plan the vacancy deliberately rather than letting a rejected increase force it in a bad month for leasing.

Conclusion

Send it early, offer a choice, name the market, and set the number where a good tenant stays. Retention is the cheapest yield improvement in residential rentals, and the renewal letter is where most of it is won or lost.

General information, not legal advice — notice periods and increase limits vary by state and city, and several markets cap increases outright.