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This! I'd be telling them that they have not had a rent increase in all the time they have been there, & it is now overdue. There will be a $10 increase regardless & this is not negotiable. If they want the air-con, the rent will be increased a further $10 ($20 all up), and it goes without...

This! Especially as you said Like I said earlier, treat it like a business. If it is due for an increase, then give it an increase regardless of whether or not they are requesting upgrades. Then let them know that if you agree to an upgrade the rent is going up FURTHER.

What you need to understand, is that owning rental properties is a Business, so treat it like one. Firstly, when a tenant signs a lease, they sign it for the property "as is". If they want extra features, then they need to pay extra for it. As it's your property, it is up to you to decide...