It’s that time of year again and you received a lease renewal letter from your landlord. But this time around they are trying to raise the rent. Of course, you could always look for a new, more affordable place to live. However, if you really like your apartment and have became good friends with your neighbors, consider negotiating the rent increase. To help you learn about your potential leverage and how to use it we put together a guide on how to negotiate rent when renewing your lease.
Be proactive and build your case ahead of time. Ideally, you should start thinking about a potential rent hike before you receive a notice from your landlord. Check your lease for terms and renewing rights. Your rental agreement might state that you have to notify your landlord about your decision to renew 60 days before the end of the lease. Start planning your negotiation strategy at least a month before that time. Approach your landlord early to allow more time to discuss the renewal.
Think like your landlord. Be your landlord. Landlords and property managers are people just like you. They don’t always raise your rent just because they want to. Oftentimes, they have to do so to offset their expenses or losses. Has your landlord just upgraded or is planning to upgrade the property? Do some parts of the apartment complex require renovations? Guess what? If they are an individual landlord, it all comes out of their pocket. If they have a lot of rent-controlled apartments in their portfolio, it could be another reason to increase rent in unregulated “market” apartments, especially if market prices grow fast.
Know their legal limits. Carefully read your lease, including the fine print. Sometimes, it can include rent increase rates for every year of your tenancy. Review your state and local housing laws that govern lease renewal processes. Learn how much a landlord can legally increase your rent and how far in advance they have to notify you about it. In California, for example, the time of notice depends on the percentage of the rent increase.
Gather some intel. Talk to other tenants and neighbors and ask how much they pay. If they pay less for the similarly sized apartment and your unit hasn’t seen any upgrades in years, you might be able to negotiate your rent when renewing your lease with your landlord and convince them to lower your rate.
Do your market research. Learn what your apartment is actually worth. Check market prices for similar apartments in your neighborhood. If your landlord is trying to increase your rent above its market rate, it’s time to negotiate.
Learn about vacancy rates. Check vacancy rates in your area. Demand for housing is usually affected by crime, infrastructure, and abundance of new construction. If there are three more apartment complexes being built in your neighborhood, your landlord has more competition and you have more leverage to negotiate your rent.
Factor in seasonality. Just like many other things in your life, including sports, produce and lattes in your local Starbucks, the rental market is seasonal. For instance, demand for apartments is low in December and January. Therefore, you are much more likely to negotiate your rent in winter. Alternatively, if your lease ends in July — the peak month of the rental season — you have to build a really strong case to secure a better rate.
Be confident and know your leverage. We are going to let you in on one secret… Your landlord wants you to renew your lease. Most landlords and property managers try to avoid tenant turnover, as it is often associated with additional costs, cleaning and repairing a unit, doing necessary renovations, and finding a new tenant, which isn’t cheap. Oftentimes, a landlord would budge and keep your old rate if your apartment is located not in the most desirable area and requires substantial investments in renovations. Note that you have more leverage when dealing with individual landlords.
Talk about your track record. If you’ve been a good, “low-maintenance” tenant so far, paid your rent on time and haven’t made any unreasonable request, it’s a good time to bring it up. Finding a good tenant can be hard and expensive. If you are a good tenant then you have a position of strength when negotiating your rent when renewing your lease.
Suggest a longer lease and offer to pay up-front. If you really like the apartment and are confident you are going to spend at least a couple of years in the area, suggest a multi-year lease. Oftentimes, individual landlords might consider a lower rate if you are willing to pay for a couple of months up-front.
Go for upgrades instead. If you are trying to negotiate down you rent, it might not be reasonable to bring up all the upgrades you asked for before. However, if the upgrades are important and you are willing to pay more for them, it’s a good time to bring them up!
Ask, don’t demand. You should always stay calm, polite and professional. Approach your landlord in person when possible to make that personal connection. The last thing you want is to burn bridges with your landlord. Even if they don’t budge and you decide to move out, you will still probably need a reference letter from them for your future apartment application.