$40 p/m should not be breaking people's banks, and if it is then they're likely living beyond their means and should consider downsizing. Even if I had just been there 6 months, it wouldn't be a super huge deal. It's not a significant increase.
Its not to some, but needing a 3 brm home it can be a bit hard to downsize. $10 a week can break the bank in some cases.

Our rent increased from $255 to $265 after 12 months, then they wanted to put it up to $280. They decided to sell instead, but I would've had to move out anway. I couldn't afford that amount.

If you think its reasonable, its within your rights to do it, especially if you could do with the money. If property value around you is increasing & your house is keeping up with that value do it. Make sure all repairs are carried out though... drove me nuts that my LL's were happy to increase my rent, but couldn't put a screen door on the front of my house. Also took 6 months for them to fix my clothes line that sagged to the ground.