Raising rent on a friend in a hot market

[Neil Gupta]

I rented out my beautiful home to a (kinda) friend. I only accepted a half months deposit and rented it for $1700 ($100-150 under market value). I just wanted someone to take care of it. Over the past year, the value (and rent) on my home has gone up considerably. My agent friend told me I should be getting close to $2200, I think $2000 would be ballpark. I've checked other available homes and mine is way bigger than anything available for $2000 a month. 

My tenant "friend" has paid rent on time but has rubbed me the wrong way on occasion. I know for a fact that her husband got a $700 a month raise. Her lease isn't over until May and she wants to renew now, I know why. I don't mind renewing but I am going to increase her rent. Question is how do I propose this to her and by how much do I raise the rent? 

Any tips and suggestions would be helpful. Thanks in advance.