A higher monthly rent does not always mean a better annual result. Compare what you earn if the tenant stays—and what happens if they leave.
By Aaron Bhawan, Cofounder, Property Copilot. Updated October 6, 2026.
TL;DR
First establish which rent-increase rules apply to the tenancy. Then compare holding rent, a smaller permitted increase and a larger permitted increase over the same period. Use current comparable listings and realistic turnover costs. A move-out is possible, not certain—and it may happen whether or not you raise the rent.
Start with the legal boundary
Before comparing the numbers, confirm which increases are available for this tenancy: the amount, earliest effective date, notice period and required form. Use the rules for the year the increase takes effect, which may differ from the year you make the decision.
Use the official provincial guidance: British Columbia, Ontario or Alberta. An advertised market rent is not permission to raise an existing tenant’s rent to that amount.
This article is a business decision framework, not a legal notice. The examples below are hypothetical; neither the increase nor the replacement rent should be treated as automatically permitted for your tenancy.
Step 1: estimate what a comparable home costs today
Search current listings in the same area for similar units. Record the rent, what is included, condition, parking, laundry and any incentives.
Use a realistic range rather than the highest listing you can find. Advertised rent is not proof of the amount a new lease achieves.
This matters because the alternatives available to your tenant may have changed. CMHC’s June 2026 update describes easing asking rents and more competition in several major markets. That does not mean every unit is below its current rent; it means last year’s comparison may be stale.
Step 2: calculate what the increase earns
Multiply the monthly increase by the number of months it would actually apply in your comparison period.
An illustrative increase from $2,000 to $2,040 adds:
- $40 per month
- $480 over 12 full months
If it takes effect partway through the year, use the actual number of months. Do not compare 12 months of extra rent with a shorter period of vacancy risk.
If the tenancy continues, the higher rent can generate income beyond this period. Run a longer comparison if that matters to the decision, using the same horizon for every option. Keep changes in insurance, maintenance, taxes and financing in a separate operating budget; the scenario table below is not a full cash-flow forecast.
Step 3: estimate the cost if the tenant leaves
Separate three inputs:
- Vacancy: the time with no rent coming in.
- Incremental turnover expenses: costs caused by this turnover, such as necessary cleaning, advertising or paid leasing work.
- Replacement rent: what the next tenant is realistically expected to pay.
Do not count a renovation you planned anyway as a cost caused entirely by the increase. Do not charge the same vacancy loss twice. If the new rent is different, include that difference in the replacement scenario.
Your own records can inform the estimates. Where you have little history, use a range and show the assumptions.
Step 4: compare complete scenarios
The table uses a 12-month period starting when the hypothetical increase would take effect. It assumes one empty month if the tenant leaves at that point, $1,000 in incremental turnover expenses, and no change in other operating costs.
| Scenario | Calculation | Rent less incremental turnover expenses |
|---|---|---|
| Hold at $2,000; tenant stays | 12 × $2,000 | $24,000 |
| Smaller increase to $2,020; tenant stays | 12 × $2,020 | $24,240 |
| Increase to $2,040; tenant stays | 12 × $2,040 | $24,480 |
| Tenant leaves; replacement pays $2,000 | 11 × $2,000 − $1,000 | $21,000 |
| Tenant leaves; replacement pays $2,100 | 11 × $2,100 − $1,000 | $22,100 |
| Tenant leaves; replacement pays $1,900 | 11 × $1,900 − $1,000 | $19,900 |
These are scenarios, not forecasts or net-profit estimates. Any of the replacement outcomes could occur after holding or raising rent. This example also assumes all rent due is collected, no second turnover occurs and any incentive has already been reflected in the replacement outcome.
The example shows the scale: an extra $480 if the tenant stays, versus a $3,000 shortfall against the hold-and-stay scenario if the unit re-rents at $2,000 after that vacancy and expense.
It does not show that the increase costs $3,000. That requires knowing whether the increase changes the chance of departure.
Do not turn a possible move-out into a certain cost
The tempting shortcut is “$3,000 divided by $40 equals 75 months, so the increase is a mistake.”
The arithmetic is correct. The conclusion is incomplete. That ratio ignores whether the tenant leaves, whether they would leave anyway, the replacement rent and the timing.
Optional: test how much the departure assumption matters
For a sensitivity check, assume the replacement outcome is $21,000 and the tenant would definitely stay if rent were held:
Expected income after increasing = (chance of staying × $24,480) + (chance of leaving × $21,000).
In that deliberately simplified example, the break-even departure probability is about 13.8%: $480 ÷ $3,480. This is a result of the invented assumptions, not a measured tenant response rate or a screening threshold.
If you think departure is possible under both options, model both. If you do not have evidence for those probabilities, stop at the scenario table. Do not turn a precise calculation into a claim that you can predict one household’s decision.
What the comparison helps you decide
When comparable alternatives cost substantially more: an increase may leave your unit competitively priced. That still does not establish that the tenant will stay.
When the difference is small: the extra income may be modest relative to the cost of replacing a reliable tenant. Compare a smaller increase and holding flat.
When alternatives cost less: consider whether an increase would make your offer less competitive, and what a replacement tenancy would realistically earn.
Payment reliability, communication and the condition of the unit also matter to the operating relationship. Keep the business analysis grounded in relevant information and the applicable rules.
Make the decision explicit
Before sending a notice, write down:
- The proposed rent and confirmed earliest effective date.
- Two or three current comparable listings, including incentives and separate costs.
- The result if the tenant stays, plus a reasonable range for vacancy, turnover expenses and replacement rent if they leave.
- Why holding flat, a smaller increase or the proposed increase is your preferred option.
If your answer changes with a small shift in vacancy time or replacement rent, that uncertainty matters more than an extra decimal place in the percentage.
Where Property Copilot fits
Property Copilot does not decide the rent increase. If the unit becomes available, it helps organize the next placement: listing, applications, identity verification, screening and supported digital leases.
Start free to manage your next vacancy in one place.
Sources and assumptions
Provincial guidance is linked above. Market context comes from CMHC’s June 9, 2026 update, reviewed October 6, 2026. All rents, costs and probabilities in the worked example are invented for illustration; they are not market estimates or recommendations for a specific tenancy.
FAQ
Should I automatically take the maximum permitted increase?
No. Compare the additional income with local alternatives and plausible retention and turnover outcomes.
Does one month of vacancy wipe out a year’s increase?
It can in an illustrative calculation, but that does not prove the increase causes the vacancy. Model the complete outcomes over the same period.
Should every turnover cost be included?
Include costs attributable to the turnover. Keep unrelated improvements and costs you would incur anyway separate.
What if I cannot estimate whether the tenant will leave?
Use stay-and-leave scenarios and a range for vacancy and replacement rent. Do not present a guessed probability as evidence.
Can I raise an existing tenant’s rent to market?
A market comparison does not determine what is legally permitted. Check the rules for the specific tenancy.