Tenant requesting long-term lease - how to bring up rent increase

[Marc Sudd]

New landlord here, coming up on the end of a 1-year lease for a home in Seattle suburb. The lease agreement has, written in that upon expiration of the 1 year lease that a month to month agreement would begin. The tenants contacted me regarding this and would like to set up a lease longer than one year. I don't mind the tenants and they are pretty good in my estimation, but I'm not sure why they wouldn't just continue with the month to month. Also, having a lease greater than a year requires a notary in Washington state, so quite the headache. I really don't want to bother with writing another lease, would it be dismissive to suggest that we just stay on a month-to-month basis?

The other thing is that rentals in our area have gone up in price significantly, with a friend who does property management telling me that we should raise rent by a minimum of $150, since all rentals nearby are going up correspondingly. I really don't want to antagonize the tenants, who have been pretty good so far, although realistically, they would not be able to find something like they have now for the same price point with the way the rental market is in Seattle.

How should I bring up the topic of a rent increase (or should we avoid doing so for the sake of keeping low maintenance tenants), and is there any reason I should create a new lease with them besides the security of keeping tenants in the unit? They have previously let me know that they plan to stay for several years, but who knows.

Thank you!